Size and Age as Determinants of Employment Growth among Manufacturing Firms in Pakistan

Farrukh Iqbal, Aadil Nakhoda

Abstract


Size-based industrial policy (support for small firms) has
long been provided by the government in Pakistan while age-based policy
(support for young firms) has become prominent in recent years. Both
policies are typically justified by reference to positive effects on
labour absorption. Despite their popularity among policymakers, however,
the empirical basis for such policies has not been adequately analysed
at the national level. We address this issue using data from a large,
multisector, random sample of manufacturing firms and find empirical
support for size-based policies but not for age-based ones. We also find
that sizebased policies appear most relevant for firms with less than
fifty workers. JEL Classification: Firm Performance: Size,
Diversification and Scope (L25); Industrialisation. Manufacturing and
Service Industries. Choice of Technology (O14) Keywords: Firm Size, Firm
Age, Employment Growth, Manufacturing; Pakistan, Industrial
Policy

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DOI: https://doi.org/10.30541/v60i2pp.119-132

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