Employers Size Wage Differential: Does Investment in Human Capital Matter?
AbstractWage differential due to employer size is one of the key areas of interest in labor market research because a strong positive relationship between employer size and wages has been observed in developed and developing countries. It is, however, relatively neglected area of research in Pakistan. The purpose of present study is to investigate the employer size wage differential by looking at human capital factors. The study is based on standard methodology and estimates earning functions on Labor Force Survey (LFS) data for year 2007-08. Results clearly show that human capital investment has a bigger role in determining wages in the larger firms as compared to smaller firms. The main policy implications emanating from the analysis are the higher investment in skill which increases opportunities for workers in the labor market for higher wages and for jobs with good characteristics especially in large sized firms. The government policy towards education and skill formation needs serious reforms and better allocation of funds so that people get chance to enhance their skill level hence wages
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 27164.
Date of creation: 22 May 2010
Date of revision:
Employers Size; Wage Differential; Human Capital;
Other versions of this item:
- Zafar Mueen Nasir & Nasir Iqbal, 2009. "Employers Size Wage Differential: Does Investment in Human Capital Matter?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 509â521.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
- NEP-HRM-2010-12-18 (Human Capital & Human Resource Management)
- NEP-LAB-2010-12-18 (Labour Economics)
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