From Workforce to Carbon Footprints: Exploring the Environmental Implications of Labor Participation in Pakistan’s Industrial Sector

Abstract

This dissertation analyzes the relationship between industrial employment and carbon dioxide emissions in Pakistan. Data on Foreign Direct Investment (FDI) and Industrial output serve as the foundation for the study. To meet the study objectives, which include defining equilibrium and interrelated dynamics alongside fundamental importance, we apply the Autoregressive Distributed Lag (ARDL) model. Specifically, heightened FDI leads to increased industrial activity, which in turn elevates emissions and/or energy consumption. The ARDL framework captures a long-run equilibrium relationship with damped distributed lags. The wear-and-tear from industrial employment role economizes the driving forces of CO₂ emissions, while a more engaged and diverse workforce can mitigate the impact. Educated employees can integrate and propel sustainable practices and energy-efficient technologies more effectively. Additionally, FDI can potentially decouple industrial growth from CO₂ emissions with strong clean technology investments and strict environmental policies. The evidence underscores the need for coordinated comprehensive policy structured to restrain simultaneously uncontrolled industrial and economic expansion alongside ecology. The proposals primarily aim at reversing the flow of clean and energy-efficient technology to strengthen the sustainability of FDI. Providing such conditions would enhance FDI positioning while achieving greater environmental sustainability. Meeting strict environmental policy frameworks while offering incentives for green investment is highly effective. This also supports the hypothesis of the Environmental Kuznets Curve (EKC) which suggests that the adverse effects on the environment caused by economic growth in the case of a country, is subsequently rectified with the increased level of income owing to the investments in advanced technologies, that are more environmentally friendly. Thus, Pakistan can strive for economic growth while containing the adverse ecological consequences by reconciling the opposing forces of environmental stewardship and industrial growth.