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Schooling is Associated Not Only with Long-Run Wages, But Also with Wage Risks and Disability Risks: The Pakistani Experience

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  • Asma Hyder

    () (Business School, National University of Sciences and Technology, Islamabad)

  • Jere R. Behrman

    () (Department of Economics, University of Pennsylvania)

Abstract

Many studies document significantly positive associations between schooling attainment and wages in developing countries. But when individuals enter occupations subsequent to completing their schooling, they not only face an expected work-life path of wages, but a number of other occupational characteristics, including wage risks and disability risks, for which there may be compensating wage differentials. This study examines the relations between schooling on one hand and mean wages and these two types of risks on the other hand, based on 77,685 individuals from the wage-earning population as recorded in six Labor Force Surveys of Pakistan. The results suggest that schooling is positively associated with mean total wages and wage rates, but has different associations with these two types of risks: Disability risks decline as schooling increases but wage risks, and even more, wage rate risks increase as schooling increases. The schooling-wage risks relation, but not the schooling-disability risks relation,is consistent with there being compensating differentials.

Suggested Citation

  • Asma Hyder & Jere R. Behrman, 2011. "Schooling is Associated Not Only with Long-Run Wages, But Also with Wage Risks and Disability Risks: The Pakistani Experience," PIER Working Paper Archive 11-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:11-013
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    References listed on IDEAS

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    1. Hamish Low & Costas Meghir & Luigi Pistaferri, 2010. "Wage Risk and Employment Risk over the Life Cycle," American Economic Review, American Economic Association, vol. 100(4), pages 1432-1467, September.
    2. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    3. Luis Díaz-Serrano & Joop Hartog, 2006. "Is there a risk-return trade-off in educational choices? Evidence from Spain," Investigaciones Economicas, Fundación SEPI, vol. 30(2), pages 353-380, May.
    4. Christiansen, Charlotte & Joensen, Juanna Schroter & Nielsen, Helena Skyt, 2007. "The risk-return trade-off in human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 971-986, December.
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    1. repec:lje:journl:v:22:y:2017:i:1:p:1-18 is not listed on IDEAS

    More about this item

    Keywords

    Wages; Risks; Labor Markets; Job Disabilities; Compensating Differentials; Developing Country; Schooling;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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