Stagflation, the Labor Market Impact, and the Poverty Puzzle in Pakistan: A Preliminary Analysis
Keywords:
Macro-dynamics, economic growth, cycles, Pakistan.Abstract
This article discusses the impact of the current stagflation in Pakistan on the labor market and poverty. The paper presents a preliminary explanation of why the labor market and poverty impact of the current stagflation may be far smaller than projected in recent studies, especially for the rural economy.The main conclusions that emerge are:The expected negative impact of low economic growth, high double-digit inflation, and energy shortages on poverty and the labor market seems to have been mitigated by a significant increase in remittances, rising wages in agriculture and services, and the presence of social safety nets.However, there is no room for complacency as over 20 million people still live in absolute poverty and the economy continues to experience deep stagflation.The PSLM (HIES) 2010/11 data should be made publicly available for more rigorous analysis.Studies on poverty should integrate macro-sectoral and micro-factors closely to comprehensively understand underlying poverty dynamics.
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