How Does Human Capital Formation Affect Labour Force Participation in Pakistan? A Primary Data Analysis

Transcription

1 Canadan Socal Scence Vol. 8, No. 4, 2012, pp DOI: /j.css ISSN [Prnt] ISSN [Onlne] How Does Human Captal Formaton Affect Labour Force Partcpaton n Pakstan? A Prmary Data Analyss Muhammad Zahr Fard [a], ; Imran Sharf Chaudhary [a] ; Muhammad Shaukat Malk [b] [a] Department of Economcs, Bahauddn Zakarya Unversty, Multan, Pakstan. [b] Insttute of Management Scences, Bahauddn Zakarya Unversty, Multan, Pakstan. Correspondng author. Receved 20 March 2012; accepted 14 August 2012 Abstract Human Captal Formaton s consdered as man source of labor force partcpaton and employment and rases economc growth and development. The major purpose of the present study s to trace out the human captal related factors whch determne employment n Pakstan. The study s based on purely prmary source of data, whch s collected by the authors by employng multstage cluster samplng technques. Bnomal Logt regresson technque s used to estmate the parameters of labor force partcpaton model. The study concludes that the completed years of educaton, experence, varous level of educaton, health status of workers sgnfcantly nfluenced the labor force partcpaton and employment. In addton, t s observed that some soco economc factors lke house holds assets, spouse partcpaton n economc actvtes and number of dependents also sgnfcantly affect the employment. Therefore, t s suggested that the government should provde educaton and health facltes wthout any dscrmnaton for all. Key words: Labor force; Human Captal; Health status; Workers level of educaton; Logstc regresson; Pakstan Muhammad Zahr Fard, Imran Sharf Chaudhary, Muhammad Shaukat Malk (2012). How Does Human Captal Formaton Affect Labour Force Partcpaton n Pakstan? A Prmary Data Analyss. Canadan Socal Scence, 8(4), Avalable from cscanada.net/ndex.php/css/artcle/vew/j.css DOI: INTRODUCTION Human captal formaton refers to the productve capabltes of human bengs as ncome -- producng agents n the economy. Human captal formaton s related wth nvestment n man and hs development as creatve and productve resource (Harbson, 1962). Human captal formaton s a process through whch knowledge, sklls and capactes of people are enhanced. Human captal s essental for the transformaton of socal and poltcal nsttutons whch every naton desres to have. Economsts have long been aware of the mportance of human captal formaton. In the very begnnng, Adam Smth (1776) emphaszed the mportance of educaton at dfferent ponts. He partcularly ncorporated the acqured and useful capabltes of all the members of the socety n the concept of fxed captal. Smth sad that: The acquston of such talents, by the mantenance of the acqurer durng hs educaton, study, or apprentceshp, always costs a real expense, whch s a captal fxed and realzed, as t were, n hs person. Those talents, as they make a part of hs fortune, so do they lkewse of that of the socety to whch he belongs. Alfred Marshall (1920) stressed on the sgnfcance of educaton as a natonal nvestment; and accordng to hs pont of vew, the captal whch s nvested n human bengs s consdered the most precous and valuable. Schultz (1962) found that the substantal rse n agrcultural productvty occurred n many countres nether due to land nor physcal captal, but new sklls and mproved knowledge brought agrcultural transformaton. He further mantaned that even when a country possessed the physcal captal and resources as those n USA, producton would fall catastrophcally, f t dd not possess suffcent captal. There would be both low output and extra - ordnary rgdty of economc organzaton untl the capactes of the people were rased by nvestng n them. However, n many underdeveloped countres, the absorptve capacty for physcal captal proved to be low, because the growth of human captal faled to keep pace wth the accumulaton of physcal captal (Hovart, 1958). Copyrght Canadan Academy of Orental and Occdental Culture 162

2 Muhammad Zahr Fard; Imran Sharf Chaudhary; Muhammad Shaukat Malk (2012). Canadan Socal Scence, 8(4), Human resource development system can be desgned to help to rase producton of essental goods and servces and at the same tme preserve and enhance the freedom, dgnty and the worth of labor force. Harbson and Myers (1970) noted that the goals of the modern socetes lke poltcal, socal and economc goals could be attaned through the development of human resources. Economc development s essentally the result of human efforts. Human captal plays a pvotal role n moblzng physcal captal and s very essental to explot natural resources, to establsh markets and to carry on trade and commerce. Human recourse development s not only meanngful ndcator of modernzaton but t s essental for the development of technology and skll whch can be a substtute for physcal captal. Now, t s realzed ntensvely that the growth of tangble captal stock depends on human captal formaton to a great extent. Keepng n vew above dscusson, Human resource development n underdeveloped countres lke Pakstan s nevtable because of rsng populaton growth, ncreasng labor force and low employment opportuntes. In addton, health facltes and better educaton facltes are avalable at lmted scale. Table 1 provdes the comparson of human captal ndcators n Pakstan and other countres n the regon. Overall Pakstan s performance regardng human captal ndcators s very poor n the regon as ndcated n Table 1. Table 1 Human Captal Indcators Countres Lteracy rate (Percent) Lfe expectancy (Years) Under 5 mortalty rate (Out of 1000) Human development ndex Sr Lanka Afghanstan Pakstan Inda Nepal Bangladesh Maldves Bhutan Not Avalable Source: Human Development Report 2011 The man purpose of the present study s to explore the human captal related factors that play an mportant role n labor force partcpaton. The rest of paper s arranged as follows: The secton II dscusses the revew of the past studes. Conceptual and theoretcal framework s presented n the secton III. The secton fourth provdes the data sources and methodologcal ssues. We have presented descrptve and economc analyss n the secton ffth. Secton sxth offers concludng remarks and polcy recommendatons. REVIEW OF PAST LITERATURE Many studes have ndcated that the growth of output n many advanced countres has been sgnfcantly affected by the mprovements n ntangble human characterstcs. In developng economes, lack of skll and knowledge s a severe lmtng factor for economc development. An mprovement n the qualty of human factor s therefore as essental as nvestment n physcal captal. If the human captal formaton s nsuffcent, physcal captal can not be productvely used. As regards the factor for human captal formaton, educaton performs a central role. It rases the effcency and productvty of workers. Educaton produces sklled manpower that s capable of leadng the economy towards the path of sustanable economc growth and development. The tradtonal theory of human captal developed by Becker (1962) and Mncer (1974) vews educaton and tranng as the man sources of human captal formaton that n turn have a postve and drect mpact on workers lfe tme earnng. There exsts a vast range of emprcal lterature on human resource development and human captal formaton both at the natonal and nternatonal levels. Lucas (1988) developed the endogenous growth models n whch human captal was consdered as the most mportant factor of producton and educaton as a major source of human captal accumulaton. In addton, general educaton lke schoolng and tranng, human captal accumulaton depend on better health, nutrton, physcal strength and occupatonal tranng (Fogel, 1994). Psacharopoulos (1994) provded comprehensve estmates of educaton returns at a global scale. He observed that there was a hgh rate of return of prmary educaton n all the regons of world. Gemmell (1996) noted that both the levels of human captal and ther growth rates to be mportant n explanng growth. Gylfason and Zoega (2003) concluded that educaton rased economc growth not only be enhancng and mprovng human captal but also socal and physcal captal Oketch (2006) focused on the role of human captal n mprovng the economc productvty. He concluded that the sources of growth of labor productvty are hgh nvestment n human and physcal captal. Most of the studes were conducted n Pakstan to observe the effect of educaton, experence and health as a human captal determnant on earnngs, employment and economc growth. Haq (1977), Khan and Irfan (1985), Ashraf and Ashraf (1996) and Fard et al. (2010) provded the estmates of earnng functon by usng dchotomous varables for varous educatonal levels. In addton, Fard et al. (2010) nvestgated the nfluence of educaton and health as human captal on employment based on Prmary source of data. The study concluded that all levels of educaton and better health were postvely and sgnfcantly related to employment. Chaudhary et al. (2009) explored the role of hgher educaton n economc growth. The analyss revealed that 163 Copyrght Canadan Academy of Orental and Occdental Culture

3 How Does Human Captal Formaton Affect Labour Force Partcpaton n Pakstan? A Prmary Data Analyss there exsted a long run relatonshp between economc growth and hgher educaton. A CONCEPTUAL AND THEORETICAL FRAMEWORK The aggregate of knowledge, abltes and sklls that may be utlzed n a productve way s referred as human captal. Accordng to Adam Smth (1776), the abltes that results from the specalzaton attaned through the dvson of labour, brng a szeable ncrease n the productvty of the other factors of producton. Irvng Fscher (1987) has ncorporated the workers n the defnton of the captal of a frm. The followng aspects are ncluded n the concept of human captal formaton by GARCIA ADRIANO:. To enhance knowledge, experence and sklls. To maxmze the utlzaton rate.. v. To gve ncentves and records to work. To explore the means and ways to enhance the allocatve effcency for decsons makng and the ablty to lead. v. To create nnovatve workng envronment for human resources. Charles and Berger (1988) suggested a varous forms of nvestment n human captal e.g. formal schoolng, job market nformaton, on the job tranng, health and santaton, and mgraton. Human captal formaton refers to such phenomenon n whch a person becomes more productve, capable and more benefcal for the socety as a result of an mprovement n human actvtes due to changes n the economy. Schultz (1961) stated that n the process of human captal formaton, humans consdered as productve assets. Further, he mentoned that educaton mght lead to hgher productvty of labor or worker. Modern technque of producton, skll and knowledge may lead to technologcal development. Educaton s a type of human captal nvestment. Generally, economsts nterpret educaton as havng drect effects and ndrect effects. Drect effects of educaton are monetary returns to nvestment n educaton. These are the grantng of knowledge and skll that are attached wth more wages. The ndrect effects of educaton are non monetary returns to nvestment n educaton. These are also known as external benefts or as non market benefts or consumpton benefts (Mc Mahon, 1999). Accordng to Bynner et al. (2003), non monetary benefts of educaton are referred as the wder benefts of learnng. These benefts nclude poltcal stablty, human rghts, hgher level of democratc partcpaton, reduced crmes and envronmental protecton, reducton n fertlty and famly welfare and health. There s a strong and postve correlaton between growth and human captal. Accordng to the conventonal Noe-classcal growth theores, presented by Robert Solow and Trevor Swan n the 1950s, an economy s output ncreases due to an ncrease of captal and labor n physcal term. These theores neglect the role of noneconomc varables e.g. human captal and human health. These growth models are subject to law of dmnshng returns to scale, whch mples slow down n the growth of the economy as the captal stock ncreases. In order to keep the economy growng, the technologcal progress s requred, whch s exogenous to the system. Consderng the above ssues, Romer (1986) developed new theory of economc growth whch s known as endogenous growth models. He broadened the concept of captal by ncorporatng human captal. By rejectng the law of dmnshng returns to scale phenomenon, he argued that the frm whch nvests n captal also employs educated sklled and healthy workers. They not only wll be more productve but wll use the captal and technology more effcently. Smply, both human captal and technology are endogenous. Lucas (1988) model structurally supported to Romer s model. He mantaned that nvestments n human captal had spllover effects that rase the level of technology by outward nfluences of human captal. DATA AND METHODOLOGICAL ISSUES Data Sources In order to analyze the role of human captal formaton n determnng labor force partcpaton, the study based on the prmary source of data that s gathered by the authors through feld survey n the year ( ). Multstage cluster and smple random samplng technques are used for collectng data. Informaton s recorded on the spot by fllng a smple and comprehensve questonnare. We have selected dstrct Bahawalpur to analyze the characterstcs of human captal. Regonal features of the dstrct are that t s almost center of Pakstan and s land locked from all sdes. The total area of the dstrct s square klometers and almost one thrd of the total area s desert called cholstan. Total populaton of the dstrct Bahawalpur s about mllon and the annual average populaton growth rate s 3.07 percent. The populaton densty s about 98 persons per square klometers and average household sze s about 6.8. Almost 72.7 percent of total populaton s lvng n rural area. The total lteracy rate s 35 percent out of whch 57 percent n urban areas and 26 percent n rural areas. The lteracy rate for males s 44.9 percent whle for females s only 26 percent. The major source of employment n Government and prvate sector s educaton and health sectors. As concerned the hgher educaton and health faclty, there are one Publc Sector Unversty, one medcal college and hosptal and sx degree colleges for boys and three for females n the dstrct. The study has ncluded all relevant varables to human captal for analyss. A sample of 494 people s drawn Copyrght Canadan Academy of Orental and Occdental Culture 164

4 Muhammad Zahr Fard; Imran Sharf Chaudhary; Muhammad Shaukat Malk (2012). Canadan Socal Scence, 8(4), randomly both from rural and urban area consderng the age group years. The study s based on an emprcal analyss. The present analyss s made at two stage level. At frst stage, statstcal descrpton of the data n the form of mean, standard devaton, Skewness and Kurtoss s presented. Further, a par wse correlaton matrx s constructed to examne the multcollnearty problem among the explanatory varables. In the second stage, we have provded the logt estmates of the human captal formaton model, whch s framed n the framework of tradtonal theory of utlty maxmzaton (Becker, 1965) by employng the maxmum lkelhood Logt model. Model Specfcaton We have used employed labor force (EMPL) as dependent varable. There s a varety of mcro and macro economc varables that determne whether a person desres to partcpate n the labour force or not. Labor force partcpaton decson s also affected by some of these factors and others requre decson. We start wth general functon: Y = f X, X, X,..., X ) (1) ( n Where, Y ndcates the labor force partcpaton decson as employed worker. Y s equal to 1 f worker jons the labor market and equal to zero f the worker does not work. Consderng, an ndex functon of Blundell (1987), Y may be defned that depends on a vector of explanatory varables X. These varables settle whether an ndvdual who desres to work. Hence, Y = βx + v If X + v > 0 = (2) Y β (3) The ndvdual would be n the employed labor force, where as f: Y β X + v 0 (4) = He or she would not. Whle Y s not drectly observable, only dummy varable Y s observed whch s defned as: Y = 1 f Y > 0 Y = 0 otherwse The probablty of fndng the employed labor force whch s proxed for human captal formaton. Prob Y = 1 Prob ( v > -βx ) = 1 F ( - βx ) Where F s the cumulatve dstrbuton functon for v. It s assumed that v s normally dstrbuted wth mean zero and constant varance (.e., IN (0, 2 σ )). The explaned varable s dchotomous n our study. So the nadequacy of lnear probablty model suggests that non lnear specfcaton may be more approprate. In order to nterpret the dchotomous dependent varable, we wll use Logt model. The Logt model assumes the followng cumulatve probablty densty functon. 1 Y = ( βx ) 1+ e (5) Where Y s the probablty that a person belongs to employed labor force, e s the exponental value. β s a row vector of parameters and X s the column vector of the varables. Wth the Logt model, the natural log of the odd rato of employed labor force to unemployed labor Y 1 Y force n ln s expressed as a lnear functon of ndependent varables, such as: Y = β 0 + β1x + μ 1 Y ln (6) Therefore, t s cumbersome to nterpret the parameters of our econometrc model because these parameters gve only nformaton on the nfluences of explanatory varables on odd rato. So we calculate margnal effects to descrbe the effect of ndependent varables on the probablty of employed labor force. The margnal effects are calculated by the followng formula (Greene, 2003). Y X = P( 1 P)βX Labor Force Partcpaton Model The research under study s based on the human captal theory developed by G. Becker (1964) and Mncer (1974). The above specfed model s a general model whch can be used as a gudng paradgm. Based on the theoretcal ratonale, labor force partcpaton model s sketched n the followng equatons. In order to analyze the determnants of labor force partcpaton, we have constructed the followng two equatons consderng the Beckeran and Mnceran concepton. The frst specfed model for labor force partcpaton s: a) Model I: EMPL = (7) f ( EDY, EXPR, EXPSQ, HEL, MAR, PHA, FAS, SPA, NDT, SEX, LCN) In the equaton of labor force partcpaton model-i, the explanatory varables are completed years of educaton, experence n years whch s calculated by deductng completed years of educaton and age of the worker at the tme of entry nto the school from the completed age of the worker (.e., EXPR = AGE Years of educaton 5), experence square, health, martal status, famly setup, spouse partcpaton n economc actvtes, number of dependents, sex and locaton. 165 Copyrght Canadan Academy of Orental and Occdental Culture

5 How Does Human Captal Formaton Affect Labour Force Partcpaton n Pakstan? A Prmary Data Analyss b) Model II: In the second model, we have ncluded dummes of dfferent educatonal levels to observe the nfluence of complete contrbuton of educaton on labor force partcpaton. In addton, age of the worker s ncorporated n the model nstead of experence. ED1, ED2, ED3, ED4, ED5, AGE, AGESQ, EMPL = f HEL, MAR, PHA, FAS, SPA, NDT, SEX, LCN c) Model III: In the thrd model, we have ncorporated nteracton dummes n order to nvestgate the combned effect of Gender Interacton. Table 2 gves the defntons and explanatons of the lst of varables that affect human captal formaton. It also provdes the theoretcal expected sgns of each varable. Defntons and Descrpton of Varables Table 2 Defnton and Hypotheszed of the Varables Varables Dependent Varable EMPL Independent varable EDY, EXPR, EXPSQ, HEL, MAR, PHA, FAS, SPA, EMPL = f NDT, SEX, LCN, SEX _ EDY, SEX _ MAR = 1 f a worker s employed labor force Explanaton of varables Explanatons of varables AGE Age of the worker n years Expected sgns AGESQ Square of the worker s age -ve EXPR Experence of the worker whch s a contnuous varable.e. EXPR = Age Educaton 5. EXPSQ Square of worker s experence -ve EDY A contnuous varable defned as the completed years of educaton ED1 = 1 f the worker s educaton level s up to mddle (8 years of educaton) ED2 = 1 f the worker s educaton level s Matrc (10 years of educaton) ED3 = 1 f the worker s educaton level s Intermedate (12 years of educaton) ED4 = 1 f the worker s educaton level s Graduaton (14 years of educaton) ED5 = 1 f the worker s educaton level s MA/MSc (16 years of educaton) HEL = 1 f worker s affected by fetal and chromc dseases lke hgh blood pressure, dabetes, heart dsease, lmpng, seeng dffcultes etc. -ve MAR = 1 f worker s marred PHA = 1 f worker s holdng fnancal and physcal assets -ve FAS = 1 f the worker belongs to jont famly system -ve SPA = 1 f the worker s spouse s partcpatng n economc actvtes -ve NDT Total number of dependents n the famly SEX = 1 f the worker s male LCN = 1 f the worker s lvng n urban area SEX_EDY =1 f the worker s male and educated =0 Otherwse SEX_MAR =1 f the worker s male and marred =0 Otherwse Copyrght Canadan Academy of Orental and Occdental Culture 166

6 Muhammad Zahr Fard; Imran Sharf Chaudhary; Muhammad Shaukat Malk (2012). Canadan Socal Scence, 8(4), RESULTS AND DISCUSSION: A) Descrptve Analyss: The study narrates the descrptve statstcs of some selected varables n the Table 3. We have noted that the average age of the employed worker s years and ts varablty about mean The value of the coeffcent of Kurtoss s 2.04 whch show that the shape of the dstrbuton s Plato - Kurtc. If we consder the completed years of worker s educaton, the mean years of educaton are years wth standard devaton The shape of the dstrbuton regardng the years of educaton s also Plato - Kurtc. Almost 27 percent employed workers are educated up to mddle level, whle 22.3 percent, 17 percent, and 16.4 percent workers are matrculate, ntermedate and graduate respectvely n our data. On the average, the experence of the workers s wth standard devaton. The study reveals that on the average 12.3 percent employed labor force s affected by major dseases lke Hgh blood pressure, heart dseases, dabetes etc. In addton, t s observed that 56.7 percent workers are lvng n jont famly setup percent are marred and 34 percent are resdng n urban areas on the average. Correlaton Matrx: The Table 4 reports the degree of the relatonshps among the explanatory varables. Ths par wse correlaton matrx s useful n detectng the multcollnearty problem. The study reveals that age and experence are hghly multcollnear. But all other varables are free from the problem of multcollnearty. In the rest of the analyss, we have avoded the multcollnearty problem by developng separate models. Table 3 Descrptve Statstcs Varables Mean Standard devaton Skewness Kurtoss AGE AGESQ ED ED ED ED ED EDY EMPLD EXPR EXPSQ FAS HEL LCN MAR NDT PHA SEX SPA Table 4 Par Wse Correlaton Matrx Varables ED1 ED2 ED3 ED4 ED5 EDY EXPR EXPSQ FAS HEL AGE AGESQ LCN MAR NDT PHA SEX SPA ED ED ED ED ED EDY EXPR EXPSQ FAS HEL AGE AGESQ LCN MAR NDT PHA SEX SPA Copyrght Canadan Academy of Orental and Occdental Culture

7 How Does Human Captal Formaton Affect Labour Force Partcpaton n Pakstan? A Prmary Data Analyss B) Estmaton Analyss: We have presented the bnomal logt estmates of the factors affectng labor force partcpaton n the Tables 5, 6 and 7. Tables contan 5 sets of numbers. The second last column of each table explans the margnal effects that ndcate the probablty dervatves. The probablty dervatve shows the change n probablty due to a one unt change n a gven explanatory varable after keepng all other varables as constant. We estmate these dervatves at the mean of the sample because bnomal Logt model s non lnear and ts probablty dervatves are not constant. The relablty of the pont estmates s examned by usng two-taled test of sgnfcance or Z-statstc to determne the acceptance or rejecton of null hypothess. We have used 1 percent, 5 percent and 10 percent level of sgnfcance for ths purpose. The ntercept term n both specfed equatons of the model are negatve and hghly sgnfcant. Generally, t has no economc nterpretaton, except that s shows the average mpact of all other omtted varables on the dependent varable. Even then, there may be many unknown factors nfluencng the varables under consderaton, no matter how carefully one selects the potental explanatory varables. The explanatory power of our model s also examned by the value of McFadden R 2 (0.53). Overall, sgnfcance of our model s judged by the value of LR-Statstc whch s hghly sgnfcant. The core human captal varables whch drectly nfluence the labor force partcpaton and play an mportant role n employment are educaton, experence and health. The coeffcent of the completed years of educaton (EDY) s postve and hghly sgnfcant at one percent level of sgnfcance. Workers are more lkely to be employed by 4.8 percentage ponts due to an addton of one year of educaton. In order to observe the return of educaton at varous levels of educaton, study has used fve dummes for dfferent levels of formal educaton, consderng non formal educaton as base category. As expected, the probablty of employed labor force rses monotoncally wth varous levels of educaton. All the educatonal levels are statstcally sgnfcant except the basc level of educaton (ED1). It s observed that hgher educaton turns out to be the most crucal factor for rasng labor force partcpaton. About 90 percent people are more lkely to be employed as a result of one unt ncrease n hgher educaton (ED5). The results of the study verfy the fndngs of Psacharopoulos (1989; 1994), Psacharopoulos and Patronos (2004), Becker (1962), Mncer (1974), and Mc Mahon (1984; 1987a; 1987b; 1999; 2000), these could fnd that educaton s regarded as a form of human captal nvestment and rases the returns to educaton. Experence s another vtal factor whch determnes the labor force partcpaton. Age and experence are hghly correlated. To avod the problem of multcollnearty, we have used experence n equaton 1 and age n equaton 2 of the model. The coeffcent of experence s postve and hghly sgnfcant. Experence ncreases the labor market partcpaton. The probablty of employed labor force rses by 3 percentage ponts because of an ncrease of one year of experence. The negatve sgn of experence shows the non lnearty relatonshp. Age s postvely affectng the employment of labor but has nsgnfcant mpact. Our result supports to the fndngs of Mncer (1974), Becker (1962), Fard et al. (2010), Shah Rummana (2007). Health status of the worker s a good ndcator of labor force partcpaton. Workers productve capacty, thnkng style and management qualtes are enhanced by good health. The present study ncorporates a bnary varable for health. Labor force partcpaton reduces, f workers are affected by major dseases lke hgh blood pressure, heart dseases, dabetes, seeng dffcultes etc. The coeffcent of health (HEL) s negatve and hghly sgnfcant. Labor force partcpaton s also nfluenced by martal status of the work force. Marred workers are more lkely to partcpate n productve actvtes. The study shows that coeffcent of MAR s postve and nsgnfcant. We have found that the presence of household s assets has negatve and sgnfcant effect on labor employment. The probablty of employed labor force dmnshes by more than 50 percent due to an ncrease of one unt n household assets. The reason may be that the asset holdng people do not learn skll and experence and do not take part n economc actvtes. We have also observed n the study area that the people holdng less assets are even no assets, are more lkely to work for meetng the need of ther famles. Famly setup s regarded a very vtal factor n rasng labor force partcpaton at an ndvdual level. The present study reveals that the famly setup has postve and nsgnfcant mpact on labor force partcpaton. We have observed that labor force partcpaton dmnshes because of spouse s partcpaton n economc actvtes. The coeffcent of SPA s negatve and statstcally sgnfcant at one percent level of sgnfcance. The number of dependents has sgnfcant mpact on human captal formaton. Workers are more lkely to partcpate n economc actvtes by 7.5 and 8.1 percentage ponts due to an addton of one dependent. The economc reason may be that workers earn more ncome by mprovng ther skll and attanng experence through learnng by dong for meetng the basc necesstes of dependents. We have found n the present study that sex and locaton or regon of resdence both have postve nfluence on labor market partcpaton. The probablty of male worker rases human captal stock by 5.5 and 5 percentage ponts. Smlarly workers lvng n urban areas are more lkely to jon labor market and ncrease the employment stock more rapdly as compared to rural workers. The reason may be that the male labor force and urban labor force have more opportuntes for attanng jobs and educaton. In addton, there are many tranng nsttutons n urban areas whch rase the productvty and effcency of the workers by provdng educaton and sklls to enhance the work force partcpaton. Copyrght Canadan Academy of Orental and Occdental Culture 168

8 Muhammad Zahr Fard; Imran Sharf Chaudhary; Muhammad Shaukat Malk (2012). Canadan Socal Scence, 8(4), Table 5 Logt Estmates of Labor Force Model-I Varables Coeffcent Std. error z-statstc Margnal effects Prob. C EDY EXPR EXPSQ HEL MAR PHA FAS SPA NDT SEX LCN LR statstc (11 df) McFadden R-squared 0.52 Probablty(LR stat) Sample Sze 494 Table 6 Logt Estmates of Labor Force Partcpaton Model-II Varables Coeffcent Std. error z-statstc Margnal effects Prob. C ED ED ED ED ED AGE AGESQ HEL MAR PHA FAS SPA NDT SEX LCN LR statstc (15 df) McFadden R-squared 0.53 Probablty(LR stat) Sample Sze 494 Table 7 Logt Estmates of Labor Force Partcpaton Model- III wth Interacton Terms Varable Coeffcent Std. error z-statstc Margnal Prob. effects C EDY EXPR EXPSQ HEL MAR PHA FAS SPA NDT SEX LCN SEX_EDY SEX_MAR LR statstc (13 df) McFadden R-squared 0.54 Probablty(LR stat) Sample Sze 494 We have ncluded nteracton terms n our labor force partcpaton model-iii. Table 7 nterprets the effect of nteracton dummes on labor market partcpaton. We have observed very nterestng results n the present study. The nteracton dummes.e. sex wth educaton and sex wth martal status have postve and hghly sgnfcant mpact on work partcpaton. The probablty of employment labor force rses f the ndvdual s male and educated or male and marred. CONCLUSIONS AND POLICY RECOMMENDATIONS The present study has emphaszed on the soco-economc and human related factors whch drectly and ndrectly nfluences worker s market partcpaton n Pakstan. The research based on the mcro study at the dstrct level ncludng both quanttatve as well as that are qualtatve varables. The mportant conclusons that are derved from the study are outlned. We have noted that the educaton, experence and health status of the workers are turned out to very sgnfcant factors. These factors have a dscernble mpact on labor force partcpaton. The results of the study show that labor force partcpaton takes place not only at an addtonal year of educaton but more employment and earnng opportuntes wt rsng trends are avalable at each level of educaton. The study has also concluded that the experenced and traned workers have more chances to get proftable jobs and aggravate the employed labor force. We have observed n the present analyss that health status has also perceptble nfluence on workers partcpaton. In addton, the research concludes that presence of assets n the form of physcal and fnancal assets has negatve and sgnfcant affect on labor force partcpaton. It means that labor force partcpaton s adversely nfluenced by ncome nequalty. Consderng the above conclusons and fndngs, the study has suggested the followng polces for rasng the employment and made more productve and effcent exstng and gradually rsng labor force. a) Govt. should provde educaton facltes to all the people of the country wth out any dscrmnaton. b) Imperatve measures should be taken by the Government to narrow down the regonal and gender dfferences n provdng educaton and employment opportuntes.. c) At the Matrc and ntermedate levels, techncal tranng and at least one hour or one day n a week practcal or on-the-job tranng must be compulsory so that the students may become an earner or responsble resdents of the country rather than burden on the economy. 169 Copyrght Canadan Academy of Orental and Occdental Culture

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