The Dynamics of Debt Bondage in Pakistan: Causes and Consequences

Abstract

Bonded labor, also known as debt slavery, has emerged as the predominant form of debt bondage in numerous developing economies. In the context of Pakistan, despite its legal prohibition, the practice is supported by an influential segment of society. This phenomenon is deeply rooted in a matrix of governmental failure, autocratic governance structures, pervasive social inequalities, and the systemic marginalization of specific communities. This study uses a distinctive dataset to scrutinize the statistical dynamics of bonded labor in Pakistan. Utilizing the Cox proportional hazards model, we investigate the likelihood of individuals resorting to debt bondage in Pakistan. Our analysis identifies a constellation of critical factors intimately linked with the profiles and household backgrounds of individuals entangled in debt bondage. These determinants encompass inherited familial wealth, acute health crises, unforeseeable catastrophic occurrences, household income levels, educational attainment, the burden of dependents, and the financial implications of dowry obligations. Furthermore, our research elucidates a significant association between the economic marginalization within labor markets and the wage disparities underscored and exacerbated by debt bondage contracts.