STRUCTURAL TRANSFORMATION AND LABOR MARKET ADJUSTMENTS IN AFGHANISTAN: EMPIRICAL EVIDENCE FROM ECONOMIC DEVELOPMENT AND EMPLOYMENT TRENDS (2017–2024)

Year 2026, Volume: 12 Issue: 2, 146 - 161, 10.03.2026

Abdul Ahmad Pooya

https://izlik.org/JA73TR73SC

Abstract

Purpose – This study examines Afghanistan's structural transformation and labor market dynamics from 2017 to 2024, focusing on the
disruptions caused by the 2021 political transition. It aims to identify how institutional fragility, return migration, and the collapse of the
formal sectors have reshaped employment structure and productivity across the economy.
Methodology – Using cross-sector data from the World Bank, the ILO, and national sources, the research applies a mixed analytical approach
combining descriptive trend analysis and structural interpretation. The study traces employment movements across agriculture, industry,
and services to uncover the phenomenon of reverse structural transformation, where labor shifts from high- to low-productivity sectors
during crises.
Findings – Results show that Afghanistan experienced a sharp 27% contraction in GDP after 2021, with about 2.6 million jobs lost, female
employment declining by two-thirds, and informality expanding to 74% of total GDP. Labor reallocation was mainly driven by survival
mechanisms rather than productivity gains, leading to increased unemployment, gender inequality, and reliance on subsistence agriculture.
Conclusion – Afghanistan's labor market adjustments after 2021 reflect structural regression rather than progress. Sustainable recovery
needs employment-focused diversification, financial revitalization, and gender-inclusive labor policies to turn short-term subsistence
resilience into long-term productive growth.

Keywords

Structural transformation , labor market dynamics , reverse structural change , informality , economic fragility , gender inequality

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