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Returns to schooling, ability and cognitive skills in Pakistan


  • Monazza Aslam
  • Faisal Bari
  • Geeta Kingdon


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

    1. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    2. Paul Fronstin & David H. Greenberg & Philip K. Robins, 2005. "The Labor Market Consequences of Childhood Maladjustment," Social Science Quarterly, Southwestern Social Science Association, vol. 86(s1), pages 1170-1195.
    3. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier.
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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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