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Returns to schooling, ability and cognitive skills in Pakistan

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  • Monazza Aslam
  • Faisal Bari
  • Geeta Kingdon

Abstract

This study investigates the economic outcomes of education for wage earners in Pakistan. This is done by analysing the relationship between schooling, cognitive skills and ability, on the one hand, and economic activity, occupation, sectoral choice and earnings, on the other. In Pakistan, an important question remains largely unaddressed: what does the coefficient on ‘schooling’ in conventional earning function estimates measure? Whereas human capital theory holds that the economic return to an extra year of schooling measures productivity gains acquired through additional schooling, the credentialist view argues that it represents a return to acquired qualifications and credentials, and a third view, the signalling hypothesis, suggests that it captures a return to native ability. This paper seeks to adjudicate between these theories using data from a unique purpose-designed survey of more than 1000 households in Pakistan, collected in 2007. The paper also examines the shape of the education--earnings relationship in Pakistan as a way of testing the poverty-reducing potential of education in Pakistan.

Suggested Citation

  • Monazza Aslam & Faisal Bari & Geeta Kingdon, 2012. "Returns to schooling, ability and cognitive skills in Pakistan," Education Economics, Taylor & Francis Journals, vol. 20(2), pages 139-173, May.
  • Handle: RePEc:taf:edecon:v:20:y:2012:i:2:p:139-173
    DOI: 10.1080/09645292.2010.488470
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    References listed on IDEAS

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    1. Bishop, J., 1991. "Impact of Academic Competencies on Wages, Unemployment & Job Performance," Papers 91-34, Cornell - Center for Advanced Human Resource Studies.
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    Cited by:

    1. Monazza Aslam & Shenila Rawal, 2013. "Preparing Women of Substance? Education, Training, and Labor Market Outcomes for Women in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(Special E), pages 93-128, September.
    2. Monazza Aslam & Kim Lehrer, 2012. "Learning by Doing: Skills and Jobs in Urban Ghana," CSAE Working Paper Series 2012-15, Centre for the Study of African Economies, University of Oxford.
    3. Undurraga, Eduardo A. & Behrman, Jere R. & Grigorenko, Elena L. & Schultz, Alan & Yiu, Julie & TAPS Bolivia Study Team, & Godoy, Ricardo A., 2013. "Math skills and market and non-market outcomes: Evidence from an Amazonian society of forager-farmers," Economics of Education Review, Elsevier, vol. 37(C), pages 138-147.

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