Economic Growth is an increase in real GDP which means an increase in the value of national output. Economic Growth is main macroeconomic variable it causes an increase in better living standard, tax revenues and create jobs. An important fact of economic growth is that it is never same in all factors. In Pakistan GDP growth is 5.28 (FY 2017).The economic growth is based on number of factors such as Human Resource, Natural Resource, capital formation, technological development and social and political factors. In this paper we will conduct study on one factor only that relates to Human resource.
Human capital is all of the knowledge, skills, and abilities, creativity, life experience and personalities that make an employee valuable in the market place. Gender inequality means that women and men are not equal. Gender inequality is present in most circumstances and has been since ancient times.
Gender inequality has differnet dimensions such as gender identity,physical integrity,education,health and inequality within households.If we eduacate a boy we educate one person,if we educate a girl we educate a family anda whole nation.There are many good reasons to believe that gender equality effects economic growth in many ways.
According to World Development Report (2012):Gender Equality and Development, there is some evidence that greater gender equality can enhance growth in three ways a substantial productivity gains may be achieved with a reduction in barriers to more efficient allocations of women’s skills and talent better outcomes for next generation may be moved by improvement of women’s endowments ,opportunities and agency and more positive outcomes ,institutions and policy options may be produced by raising women’s individual and collective agency. This paper attempts to estimate the impact of determinants of gender gaps in this area. Female education contributes positively in the development process of societies but the development takes time to surface.
There are direct as well as indirect impact of education. For example educated married couples are often found to be helping hands for each other on different issues and prove to be lifelong learning sources for each other. There is ample evidence that female education plays a central role in developing process. Schultz (1994) believes that it is not practical that the under investment in female education yields economic efficiency. In some instances investment in girl’s education yields far higher returns as compared to the return on investment in girls education yields far higher returns as compared to the returns on investment in boy’s education.
Female education positively contibutes in the developing process but it takes time to surface.There is direct as well as indirect effect of education.Educated married couples can overcome easily from different issues of life as compare to uneduacted couples.
There is emperical evidence to prove that female education plays very important role in development process in societies.Schultz (1994) believed that under investment in female education yields economic efficiency is not practical anywhere and rate of return of male and female education is same.In some instances investment in girls education yield high rate of returns compared to the investment in boys education.
1.1. Research Gap
In previous studies it is estimated that gender inequality has a negative or positive impact on economic growth. Dao (2013) examined the impact of gender gap in human capital on economic growth by taking GDP per capita as dependent variable. lorgelly (2000) also in his paper estimates the impact of gender inequality on growth. But we found a gap that is not explained in previous studies. The research gap is that gender gap in male and female wages.
The specific objectives of study are as follows;
To examine the causes of gender inequality in human capiatl in Pakistan.
To compare gender inequality in education and employment in pakistan.
To investigate how gender inequality in human capital impacts economic growth and development.
1.3. Organization of study
The next section of the paper elaborates the current literature on the issue. The model is specified in section 3, moreover detailed methodology data sources are provided in section 4.The results are incorporated in section 5 and conclusions and policy implications are enlisted in section 6.
2. Literature Review There is not a clear relationship between gender inequality and economic growth.Some authors showed that there is positive relation while other showed negative relationship between gender inequality and economic growth.
World Development bank report (2001) has shown that gender inequality tends to slow economic growth and make the rise from poverty more difficult .Clearly a country’s economy will be in disparity if the female half of its population does not gain equal access to the economic contribution process.
Taylor M.M & Seatle (2017) used cross sectional data of 96 countries from 1980 to 2015.Model examined the relationship between gender inequality and economic growth.They used ordinary least square method to estimate the model.To measure gender inequality they used GII.GII is found to be consistent and suitable to providing a broad understanding.They found that increase in gender inequality highly significant negatively effects the GDP per capita
Stephan Klasen & Fracesca Lamanna (2009) used cross country and panel data and investigated how much gender inequality in education reduce economic growth.Model is estimated through ordinary least square method.Results suggested that gender inequality in education have significant negative impact on many other goals such as reduction in fertility ,chlid mortality and under nutririon.Thus gendre inequality not only reduce growth but also many other development goals.
Karoul & Rochdi (2015)used the panel dat from time period 1985-2011.The authors analyzed the effect of gender inequality on economic growth using GMM techniques.Model showed a positive and significant population effect on economic growth and and on the other hand a statistically significant and a negative effect of investment on growth.Gender inequality has a significantly negative effect of 5%.
Klasen (2000) investigated that reduced growth and development is caused by gender inequality in education and employment.Klasen found that gender inequality has strong impact on economic growth.Results showed that economic growth is directly effected by gender inequality in education.
Stephanie Seguino (2000) took cross country data and investigated the determinants of economic growth for a set of semi-industrialized export oriented economies in which women provide bulk of labor in the export sector.Analysis showed that GDP growth is positively related to gender wage inequality.There is positive link between gender wage inequality and growth.
Fatima (2013) used the data of time period 1975–2009 and Generalized method and moment (GMM) has been applied.The results confirmed that the gender gap in education has negative impact on economic growth both directly and indirectly.
Sadeghi (1995) organized a dtudy of non Eurpean countries from the year 1950 to 1989.He assess the impact of primary and secondary schooling of male and female.He used Ordinary Least Squares method.He explored a positive and significant effect of education on gross natioal product.
Lawrence H.Summers (1994) conducted a study on developing countries and showed that female education has high rates of returns because only few women get education.He used five very important variables namely economic incentive,portfolio choice,cost and mortality rate.Famale eduaction has positive and significant impact on these variables.The main reason for slow economic growth in South Asia is gender bias in education.
Abbas (2001) conducted a study to estimate the relationsh between human capital and economic growth.He used panel data from Sri Lanka and Pakistan.He used the Ordinary Least Square method to estimate the model and found a significant positive impact of secondary education and primary education has insignifant impact on economic growth.
3. Model and Methodology
The model is taken from the research paper by Dao (2013) paper named “Gender Gaps in Human Capital and Economic Growth in Developing Countries “In deriving the GDP growth model we shall use the traditional approach of introducing gender Gap as an input in the aggregate production function.
Y = ? + ?1PHC + ?2LF + ?3HC + ?4G + ?5INF +FER+ µ
Y is income, PHC is physical capital, LF is labor force, HC is human capital, and G denotes gender gap and INF represents infrastructure,FER is fertility