Could you pass O-level economics in Pakistan?

The question: What causes unemployment?

The answer: Over the fold, taken from a textbook currently used for O-level (roughly grade 11) social studies in Pakistan.

I don't know if I would have passed. What about you?

Comments

[Alex Godofsky]

Population growth has to be the most extreme and facepalmy version of the lump-of-labor fallacy I've seen.

[Frances Woolley]

Alex - "the most extreme and facepalmy version of the lump-of-labor fallacy"

You picked up right away on one of my reasons for posting these pages. But look at the second page and the story about the farmer with the 5 sons. There's at best a fixed quantity of arable land in Pakistan, so it's not like you could simply duplicate the current economy to absorb the extra people. What kind of jobs can be created for the 2 sons who aren't needed on the farm? They don't have the skills necessary to work in tourism or the steel factory, much less high tech (see the skills mismatch picture). Moreover, political instability makes people - both locals and foreigners - reluctant to invest in Pakistan. Perhaps in the long run that population growth can be absorbed, but is it really entirely stupid to figure that, at least in the short- to medium-term, high rates of population growth lead to higher rates of unemployment? Even in Canada, youth unemployment rates are generally well above the national average, so having a younger population would probably lead to higher rates of equilibrium unemployment here too.

[Nick Rowe]

I thought it was a multiple choice test, and was looking for "none of the above".

[louis]

I think they need some urban economics to explain why the migration out of rural areas is a good thing.

[Frances Woolley]

Louis: "I think they need some urban economics"

On the other hand, Nick argues here that, on balance, cities are too big, that too many people move to them. I'm wondering if Nick's anti-urban economics posts could provide an intellectual foundation for this people-migrating-to-cities-cause-unemployment argument? Or one could make a case that migration-causes-unemployment based on some combination of imperfect information and rent-seeking behaviour, so too many people come to cities for the same reason that too many people try to become professional athletes or musicians.

[Frances Woolley]

Nick - "none of the above" - don't tell me you're passing up this opportunity to explain why it's a bad idea for people to move from rural areas to cities!

[nadeem haque]

Here is a synopsis of the 2011 growth policy (Framework for Economic Growth (FEG)) of the Planning Commission of Pakistan. http://development20.blogspot.com/2013/11/understanding-growth-in-pakistan.html

Sadly this is not what the text book is reflecting

But bear in mind this was a govt produced book put out under supervision of bureaucrats.

The text book agency should be disbanded asa the FEG asked for.

[Frances Woolley]

Nadeem - thanks so much for sharing that link. I also found this: http://www.pc.gov.pk/feg/.

There's a huge disconnect between the econ taught in high schools and what experts believe here in Canada. So it's not really surprising that there's a similar lack of connection in Pakistan as well. I was somewhat surprised that all of the high school texts I was shown had a "University of Cambridge" imprint - what's the story there?

[Bob Smith]

"Even in Canada, youth unemployment rates are generally well above the national average, so having a younger population would probably lead to higher rates of equilibrium unemployment here too."

Although the Europeans would seem to provide a healthy counter-factual to that hypothesis - having an aging population and even higher levels of youth unemployment.

[Ashfak Baloch]

in the culture restraints part, both activities are employment generating activities and how consumption kills jobs? this a totally illogical argument!

[Frances Woolley]

Ashfak: "how consumption kills jobs?"

I agree with you completely. Also, big gatherings like weddings play a role in creating social capital. In rural Pakistan, are you better off buying insurance, or are you better off investing in good relationships with your neighbours and extended family? I know which one I'd choose.

That's not to say that Pakistan is immune from the issues around dowries that affect so much of the region. But the textbook wasn't calling out excessive dowry demands; it was speaking to consumption more generally.

[Majromax]

Hm. Thinking about this, A is a lump of labour fallacy (in isolation); B, C, E, & F are all "lack of human capital"; D is "lack of investment in physical capital"; E is an accounting mistake (unless it's assuming that *employed* rural dwellers become *unemployed* urban residents); and F is a lack of institutional capital.

[Saadia]

Pakistan has its local matriculation board (where you finish high school in grade 10, attend college for two years, Then go to university). Then it has what you can call the Cambridge board which gives you the GCSE - the General Certificate of Secondary Education as in the UK - high school ends at grade 11 (that's O level or Ordinary level), then grades 12 and 13 are A level or advanced level, then you go to university. For schools following the Cambridge board, I believe the curriculum and examinations are set at the University of Cambridge or somewhere in the UK (pretty sure only for grades through 10-13 only). That was the case 15 years ago when I did my O level there. Thus the university of Cambridge markings. Such schools have proliferated though I'm not sure they are all imparting a good quality education (which was the main attraction in past years). That's roughly the idea.

[Frances Woolley]

Saadia - "I believe the curriculum and examinations are set at the University of Cambridge or somewhere in the UK"

Thanks for this. With your tip I managed to find the Cambridge materials on-line here http://www.cie.org.uk/images/164374-2016-syllabus.pdf. I guess it's similar to the situation in Canada where some students enrol in International Baccalaureate programs or in Lycees that teach the French curriculum. But I wonder how much influence the Pakistan government has over the contents of the U Cambridge texts etc. I guess the attraction of the U Cambridge curriculum might be that it's recognized internationally in a way that, perhaps, locally designed and controlled curricula aren't. Which takes us back to the last point in the pictures above - political instability (and all of the other stuff that's subsumed under the broad label of "political instability" like governance and trust).