Human Capital and Endogenous Growth: Incorporating the Role of Unemployment in Determining Returns

  • Hina Ali Assistant Professor, Department of Economics, The Women University, Multan, Pakistan
  • Saadia Irshad Assistant Professor, Institute of Management Sciences, The Women University, Multan, Pakistan
  • Maria Shams Khakwani Lecturer, Institute of Management Sciences, The Women University, Multan, Pakistan
  • Tayyaba Naveed Lecturer, Department of Psychology, University of Sahiwal, Sahiwal, Pakistan
Keywords: Gross Domestic Product, Unemployment, Age, Education, Mortality rate.


This study reported the returns to Human Capital in Pakistan. The main purpose of this study is to estimate the returns to human capital. In Pakistan, the level of output is dependent on manpower. Human Capital is a significant contributor in the way to betterment in the economic condition. In this study, time series data is used, and co-integration is applied for the empirical estimation. Gross Domestic Product (GDP), education, mortality, enrolment, unemployment, and age are the core variables of the research. Education has a positive impact on productivity. An increase in education level raises the female labor force participation in Pakistan. The presence of children decreases the early age participation in the labor market. The result shows that when the education level is increased, it boosts the economic activity, and the female labor force participation is the main reason that is increasing its likelihood. It is recommended that government should provide better facilities of education to enhance the female force participation in the labor market in the case of developing countries, by providing the best grades and tasks to the human beings both male and female, thus the level of returns by human capital utilization may increase.


Download data is not yet available.

Article Analytics Summary


Adejumo, O. O., Asongu, S. A., & Adejumo, A. V. (2021). Education enrolment rate vs employment rate: Implications for sustainable human capital development in Nigeria. International Journal of Educational Development, 83, 102385. DOI:

Afzal, M. (2014). Micro econometric Analysis of earnings-oriented educational system of Lahore (Pakistan). Pakistan Economic and Social Review, 52(2), 227.

Ali, S. (2011). Deficient policy communication deficient outcomes–capacity building policy under education reforms in Sindh, Pakistan. Bulletin of Education and Research, 33(1), 1.

Becker, G. S. (1962). Investment in human capital: A theoretical analysis. Journal of political economy, 70(5, Part 2), 9-49. DOI:

Chaudhry, I. S., Faridi, M. Z., &Anjum, S. (2010). The Effects of Health and Education on Female Earnings: Empirical Evidence from District Vehari. Pakistan Journal of Social Sciences (PJSS), 30(1).

Faridi, M. Z., Chaudhry, I. S., & Basit, A. B. (2009). An Analysis of the Determinants of Male Labor Force Participation and Employment Status in Pakistan: The Case of Bahawalpur District. Pakistan Journal of Social Sciences (PJSS), 29(2).

Faridi, M. Z., Malik, S., &Basit, A. B. (2009). Impact of Education on Female Labor Force Participation in Pakistan: Empirical Evidence from Primary Data Analysis. Pakistan Journal of Social Sciences (PJSS), 29(1).

Faridi, M. Z., Hussain, S., & Bashir, F. (2010). Impact of Education on Students Earnings: A Case of Public Sector Universities in Pakistan. International Research Journal of Finance and Economics, 42, 171-178.

Khan, F. S., & Toor, I. A. (2003). Changes in returns to education in Pakistan: 1990-2002.

Hassan, G., & Cooray, A. (2012). The effect of female and male health on economic growth: cross-country evidence within a production function framework.

Himaz, R., & Aturupane, H. (2011). Education and Household Welfare in Sri Lanka from 1985 to 2006. Department of Economics, University of Oxford.

Jamal, H. (2015). Private Returns to Education in Pakistan: A Statistical Investigation.

Khadim, Z., & Akram, W. (2013). Female labor force participation in the formal sector: An empirical evidence from PSLM (2007-08). Middle-East Journal of Scientific Research, 14(11), 1480-1488.

Khalid, H. S., & Mukhtar, E. M. (2002). The future of girls’ education in Pakistan. Islambad: UNESCO Offfice.

Khan, F. S., &Toor, I. A. (2003). Changes in Returns to Education in Pakistan: 1990-2002.

Mat, N. A., Mansur, K., & Mahmud, R. (2015). The relationship between human capital investment and economic development in Sabah. Malaysian Journal of Business and Economics (MJBE), 2(1).

Mincer, J. A. (1974). Introduction to" Schooling, Experience, and Earnings". In Schooling, experience, and earnings (pp. 1-4). NBER.

Mushtaq, K., Hussain, M., Afzal, M., & Gilani, S. A. (2020). Health Care Delivery System of Pakistan and Bangladesh: A Comparative Analysis. National Journal of Health Sciences, 5(1), 35-41. DOI:

Nasir, Z, M. & Nazli, H. (2010). Education and earnings in Pakistan. Working papers & Research Reports; RR-NO.

Nasir, Z. M. (2002). Returns to human capital in Pakistan: A gender disaggregated analysis. The Pakistan Development Review, 1-28. DOI:

Nasir, Z. M. (2005). An analysis of occupational choice in Pakistan: A multinomial approach. The Pakistan Development Review, 57-79. DOI:

Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American statistical Association, 94(446), 621-634. DOI:

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326. DOI:

Psacharopoulos, G. (1980). Higher education in developing countries. World Bank staff working paper, (440).

Psacharopoulos, G. (1981). Returns to education: an updated international comparison. Comparative education, 17(3), 321-341. DOI:

Psacharopoulos, G. (1985). Returns to education: a further international update and implications. Journal of Human resources, 583-604. DOI:

Psacharopoulos, G. (1994). Returns to investment in education: A global update. World development, 22(9), 1325-1343. DOI:

Psacharopoulos, G., & Chu Ng, Y. (1994). Earnings and education in Latin America. Education Economics, 2(2), 187-207. DOI:

Qadir, F., & Afzal, M. (2019). Impact of Cultural Factors on Earnings of Working Women in Khyber Pakhtunkhwa, Pakistan. European Online Journal of Natural and Social Sciences: Proceedings, 8(1 (s)), pp-92.

Son, H. H. (2010). Human capital development. Asian Development Bank Economics Working Paper Series, (225). DOI:

Uduji, J. I., Okolo-Obasi, E. N., & Asongu, S. A. (2020). The impact of corporate social responsibility interventions on female education development in the rural Niger Delta region of Nigeria. Progress in Development Studies, 20(1), 45-64. DOI:

How to Cite
Hina Ali, Saadia Irshad, Maria Shams Khakwani, & Tayyaba Naveed. (2021). Human Capital and Endogenous Growth: Incorporating the Role of Unemployment in Determining Returns. Journal of Accounting and Finance in Emerging Economies, 7(1), 251-262.