Abstract
This article examines the strength of relationship between human capital and production at aggregate and sectoral levels. The study uses an annual data set from 1981 to 2014 taken from Pakistan Bureau of Statistics. The study used aggregate and sector-wise production models and applied augmented Dickey–Fuller (ADF) test to check the order of integration and JJ co-integration. Dynamic ordinary least square (DOLS) and fully modified ordinary least square (FMOLS) tests are used to check the consistency of initial findings and the sensitivity analysis is performed in order to check the robustness of results. The study illuminates the impact of human capital on the production of agriculture, industrial and services sectors, and compares the strength of this relationship with the coefficients obtained through aggregate data. The study found evidence of positive human capital contribution in aggregate and sectoral productions; however, its magnitude is found to be similar in the agricultural and industrial sectors which was higher than the magnitude associated with the services sector.
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