This study identifies the extent to which various socioeconomic groups are vulnerable to aggregate business cycle fluctuations. Socioeconomic groups are classified by gender, location, employment status, education, income and age cohort. The asymmetric behavior of aggregate economic growth indicates that some groups gain less during recovery and boom phases and are thus most vulnerable to recessions. A vulnerability index in calculated for different socioeconomic groups and the empirical results show that employers with a graduate degree in Balochistan are the most vulnerable group and that female workers are more vulnerable than male workers. Additionally, the study employs panel data on inflation and employment to investigate the implications of macroeconomic fluctuations on vulnerable groups. The results indicate that food inflation has a strong negative impact on real earnings, while nonfood inflation increases real earnings. The panel data and vulnerability index findings are consistent with each other. The study also presents policy implications for existing public social safety net programs and prospective private social innovation programs targeting vulnerable households.
KEYWORDS: Business cycle fluctuations, socioeconomic groups, vulnerability, GMM, Pakistan, real earnings.
JEL: E32, E24, E31, J16, J11.

Pakistan’s agricultural sector has experienced restructuring over the last decade, from changes in land markets to the move toward nonagricultural labor markets. However, agriculture remains one of the most important sources of livelihood, accounting for 45 percent of the country’s workforce. It is also a key policymaking area, but the role of small farmers in poverty reduction is still being examined. The future of small farms cannot be viewed in isolation, that is, without taking into account their synergies with nonfarm rural activities. We measure the impact of diversifying sources of livelihood on household income and consumption among small farms in rural Pakistan. Using a balanced panel of 2,058 households from the Pakistan Panel Household Survey (2001–10), we find that both consumption and income are (i) significantly higher for households that have diversified their sources of income and (ii) diversified households also plant greater varieties of crops. These results suggest that nonagricultural activities tend to complement agricultural activities with a view to improving welfare in a rural economy.
KEYWORDS: Agriculture, income, diversification, Pakistan.
JEL: O1, Q1, E2.

Almost half the world’s adult population lacks access to a formal bank account and other financial services. Pakistan is no exception and it is also among those countries at the lower end of the spectrum of financial inclusion. However, steps are being taken by government regulators and the private sector to improve access to financial services such as credit, savings, remittances and insurance. The introduction of mobile banking is a notable step in this context. Mobile banking, which comprises mobile wallets and over-the-counter transactions, is rapidly growing around the world and has the potential to reduce barriers to financial inclusion and thus transform economies. The benefits of this platform are even more pronounced for economies with a weak financial architecture and where formal banking entails considerable costs in terms of time and distance. This paper traces the history of mobile banking in Pakistan, studies various models of mobile banking and assesses its current state using the available data to understand how this segment has evolved and transformed conventional banking structures in the country. It also touches on the ecosystem that needs to be built in Pakistan to utilize the full potential of mobile technology.
KEYWORDS: Mobile banking, financial inclusion, branchless banking, Pakistan.
JEL: O16, G21, G23, G28.

Although health and safety regulations are a key aspect of labor market policymaking, very few studies have examined compensating wage differentials and the statistical value of injury in Pakistan’s context. This study looks at injury risk against occupation and industry, using data from the Labor Force Survey for 2013/14. We target five blue-collar occupations in two industries (construction and manufacturing), which tend to account for the highest number of injuries. However, we find that the statistical value of injury in these occupations is too small to reflect the wage premium that workers should be paid for risky jobs.
KEYWORDS: industry, labor market conditions, public policy, Pakistan.
JEL: O14.

The literature on industrial organization shows that geographic and industrial concentration affects firm turnover. This study conducts a firm-level analysis to gauge the impact of agglomeration on firm entry and exit in domestic industries in Punjab, Pakistan. It also illustrates how certain industries exist in clusters while others are highly dispersed. The results suggest that higher rates of firm entry and exit are associated with highly agglomerated industries.
KEYWORDS: agglomeration, firm entry, firm exit.
JEL: D22, L16.

This study applies panel least squares and fixed effects to a sample of 40 banks for the period 2006–14 to identify the key determinants of nonperforming loans (NPLs) in Pakistan. The findings suggest that, in addition to some macroeconomic and bank-specific variables, the corporate debt–equity ratio and financial burden have a positive, significant impact on NPLs, while corporate asset utilization and the diversification of bank activities significantly reduce the volume of NPLs. This has policy implications not only for the federal government, but also for bank managers, regulators and policy advisors.
KEYWORDS: nonperforming loans, bank asset quality, diversification, Pakistan.
JEL: G21, G28, G00.

This study examines whether there is a causal relationship between selected stock markets in Asia and the US. Based on stock values from a sample of nine Asian stock markets, we find a positive correlation with US stock market prices in most cases, the exception being Vietnam. Our results indicate significant long-run and short-run causality in both directions between the Asian and US stock markets. These findings show that, while both sets of markets are integrated, there are still valuable opportunities for international investors to diversify their portfolios in the US and Asia.
KEYWORDS: stock market, short and long term causality, Asia, USA.
JEL: F21.

This study examines the indirect impact of rural electrification on education. It finds that the greater the likelihood of a household being connected to the electricity grid, the more time the household’s children are likely to spend studying at home. This finding is interpreted as indirect evidence of an improvement in levels of schooling. Using instrumental variables to overcome endogeneity problems, the study’s LATE estimates reveal that providing households with access to electricity leads to children studying an extra 94 - 137 minutes at home per day, on average.
KEYWORDS: rural electrification, infrastructure, education, Peru.
JEL: O12, C31, C81.

This paper examines the energy–poverty nexus in Pakistan at the national and provincial level, using the multidimensional energy poverty index. Based on data from the Pakistan Social and Living Standards Measurement Survey for 2010/11, we find that the average household in Pakistan is 26.4 percent energy-poor. The study shows that the incidence of energy poverty is higher in rural areas than in urban areas, with a similar trend at the provincial level. A comparison with findings based on data from 2008/09 shows a slight decrease in energy poverty at the national level.
KEYWORDS: energy, poverty, households, Pakistan.
JEL: Q01.

This study estimates the magnitude of trade misinvoicing in Pakistan with 21 of its developed trading partners in 52 major traded commodities during 1972–2013. We find that the total volume of trade misinvoicing for this period exceeds US$92.7 billion. The gross revenue loss borne by the national exchequer due to trade misinvoicing is estimated at US$21.2 billion. Moreover, the total net revenue loss is an estimated US$11 billion in the form of evasion of customs duties and export withholding tax. The annual average net revenue loss due to trade misinvoicing is almost equivalent to 11.2 percent of the total revenue generated from customs tariffs. We also find that customs tariffs and the interest rate are positively associated with import under-invoicing, while improvements in the current account balance and political stability reduce the extent of import over-invoicing. Capital account openness is found to be insignificant in determining trade misinvoicing.
KEYWORDS: Trade misinvoicing, revenue loss, capital flight, reverse capital flight, black money, Pakistan.
JEL: F14, K20, F13, H26, O17.