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Wage Differentials, Rate of Return toEducation, and Occupational WageShare in the Labour Market of Pakistan

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  • Hyder, Asma

Abstract

This paper examines the magnitude of public/private wage differentials in Pakistan using data drawn from the 2001-02 Labour Force Survey. Pakistan Labour Force Survey is a nationwide survey containing micro data from all over the country containing demographic and employment information. As in many other countries, public sector workers in Pakistan tend to have higher average pay and educational levels as compared to their private sector counterparts. First, this paper presents the inter-sectoral earning equations for the three main sectors of the economy, i.e., public, private, and state-owned enterprises. These results are further decomposed into “treatment” and “endowment effect”. To examine the role of human capital in wage gap, the rate of return to different levels of schooling is calculated. These rates of return to education may be important for policy formulation. The relative earning share is also worked out to look into the distribution of wages across the occupational categories. The earning equations are estimated with and without correction for selectivity, which is also the main objective of the study, i.e., to find out if any non-random selection is taking place within these three sectors of employment.

Suggested Citation

  • Hyder, Asma, 2007. "Wage Differentials, Rate of Return toEducation, and Occupational WageShare in the Labour Market of Pakistan," MPRA Paper 2224, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2224
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    1. Taye Mengistae, 1998. "Wage rates and job queues: does the public sector overpay in Ethiopia?," CSAE Working Paper Series 1998-20, Centre for the Study of African Economies, University of Oxford.
    2. Asma Hyder & Barry Reilly, 2005. "The Public and Private Sector Pay Gap in Pakistan: A Quantile Regression Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(3), pages 271-306.
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    Cited by:

    1. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector," PIDE-Working Papers 2007:18, Pakistan Institute of Development Economics.
    2. Harry Patrinos & Cristobal Ridao-Cano & Chris Sakellariou, 2009. "A note on schooling and wage inequality in the public and private sector," Empirical Economics, Springer, vol. 37(2), pages 383-392, October.
    3. Aslam, Monazza & Kingdon, Geeta, 2009. "Public-private sector segmentation in the Pakistani labour market," Journal of Asian Economics, Elsevier, vol. 20(1), pages 34-49, January.
    4. Muhammad Nauman Malik & Masood Sarwar Awan, 2016. "Analysing Econometric Bias and Non-linearity in Returns to Education of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 837-851.
    5. Jamal, Haroon, 2015. "Private Returns to Education in Pakistan: A Statistical Investigation," MPRA Paper 70640, University Library of Munich, Germany.
    6. Javed Ashraf, 2011. "New Evidence On Rates Of Return To Education In Pakistan," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(3), pages 113-120.
    7. Sajjad Haider Bhatti & Muhammad Aslam & Jean Bourdon, 2018. "Market Returns to Education in Pakistan, Corrected for Endogeneity Bias," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 23(1), pages 79-96, Jan-June.
    8. Oancea, Bogdan & Pospisil, Richard & Dragoescu, Raluca, 2017. "The return to higher education: evidence from Romania," MPRA Paper 81720, University Library of Munich, Germany.
    9. Abdul Qayyum & Idrees Khawaja & Asma Hyder, 2008. "Growth Diagnostics in Pakistan," PIDE-Working Papers 2008:47, Pakistan Institute of Development Economics.
    10. Asma, Hyder & Javaid, Zainab, 2009. "Impact of Training on Earnings: Evidence from Pakistani Industries," MPRA Paper 19570, University Library of Munich, Germany.
    11. Ahmed Nawaz Hakro & Yaseen Ghulam & Shabbar Jaffry & Vyoma Shah, 2021. "Employment Choices and Wage Differentials: Evidence on Labor Force Data Sets from Pakistan," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(1), pages 199-216, March.

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    More about this item

    Keywords

    Wage Differentials; Rate of Return to Education; Public Sector; Labour Markets;
    All these keywords.

    JEL classification:

    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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