Do Livelihood Capitals Improve Household Welfare? An Ordered Logistic Analysis of Textile Workers in Pakistan

Abstract

In developing countries, household welfare of industrial workers is increasingly influenced by multidimensional constraints that are not limited to income such as health, quality of housing and availability of basic services. The textile industry in Pakistan is one of the largest providers of industrial jobs in the country, so it is critical to know how the resources available to workers in terms of livelihood are converted to welfare outcomes to inform evidence based social protection and labor policy. This paper considers how the sustainable livelihood capitals impact upon the household welfare status of textile worker families in Punjab in Pakistan. Based on the primary survey data of 410 textile workers, economic, health, and housing related indicators were used to create a multidimensional welfare index. To achieve increased robustness and less subjectivity, the weights of indicators were computed with a hybrid method that combines expert based subjective weights with entropy based objective weights. The resultant welfare index was made normalized and divided into three ordinal welfare groups: low (0.14-0.45), medium (0.45-0.60) and high (0.60-0.91). As explanatory variables, seven livelihood capital indices, i.e., human, natural, financial, physical, social, information, and psychological capital were determined. Ordered logistic regression model was estimated to determine the effects of change in each capital on the probability of being in higher welfare categories and marginal effects calculated to interpret the change in probability. The results demonstrate that upward welfare mobility is most closely related to financial and physical capital improvements, and human and natural capital also have a positive impact. Conversely, social and information resources demonstrate weaker or statistically unfounded relationships with higher welfare status, which indicates that not all types of capital produce similar welfare gains in industrial labor environments. The research emphasizes the significance of specific interventions to increase financial inclusion, stabilize linked benefits related to employment, and the housing and service conditions of workers. The findings provide policy-implication on how government and industry stakeholders can enhance welfare outcomes by designing livelihood-based policies.