Pakistan’s economy is facing the lowest female participation rates compared to the developed and
other South Asian economies. Consequently, there is an acute need for in-depth analysis of the role
of women in Pakistan’s labour market. This chapter analyses the labour market status of women
in Pakistan and compares it with men’s states of employment with reference to two labour market
states: working and not working which are further enumerated into four categories. The working
state comprises of paid employees, unpaid family helpers, and those self-employed in the agriculture
sector and self-employed in the non-agriculture sector. The not working state comprises ill
or handicapped, students, housekeepers, and other inactive individuals. Further, the demand and
supply side determinants including an individual’s personal characteristics as well as household
characteristics affecting the labour market participation decision have been explored. Pooled data
has been constructed from the Pakistan Social and Living Standard Measurement (PSLM) Survey
using 2005-09 cross-section data sets. A Multinomial logit (MNL) methodology is applied. Given
that the MNL model relies on the assumption of independence of irrelevant alternatives (IIA) two
tests of IIA Hausman-Mcfadden (HM) test and the Small-Hsiao (SH) test have been performed.
The main findings suggest that age has a positive and significant impact across board on all the
states of working males and females in labour market except males as unpaid family helpers. A
married woman, having more than two children or the one who owns a house, or belongs to a joint
family, or resides in urban areas is less likely to participate in the paid employment. However, for
males the results are quite opposite. A higher number of working people in the household increases
the likelihood of participation in all states of employment whereas, the number of children lowers
the probability of being in paid employment but increases the probability of being self-employed
for both gender groups. Similarly, being a member of joint family lowers the probability for both
genders to be involved in all the working categories except for unpaid family helpers which is
higher for males. Conversely, the probability is higher for both groups to be in all the states of
not-working when residing in a co-residence. An increase in education may increase the probability
of being in the state of student relative to work. For a female, ownership of the house, higher
household income or being married leads to a higher probability to staying at home and performing
the housekeeping activities. On the other hand, for males the probability is low for being in
any state of inactivity.