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Employers Size Wage Differential: Does Investment in Human Capital Matter?

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  • Nasir, Zafar Mueen
  • Iqbal, Nasir

Abstract

Wage 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

Suggested Citation

  • Nasir, Zafar Mueen & Iqbal, Nasir, 2010. "Employers Size Wage Differential: Does Investment in Human Capital Matter?," MPRA Paper 27164, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27164
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    Cited by:

    1. Atif Khan Jadoon & Ambreen Sarwar, 2020. "Is Trade Liberalisation Pro‐Poor in Pakistan? Evidence from Large‐Scale Manufacturing," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(3), pages 360-394, September.
    2. David Umoru & Harrison Ogbeide Eromosele, 2020. "Growth Stabilisation Effects of Macroeconomic Policy Coordination in Nigeria: An Econometric Analysis," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(1), pages 51-60, March.
    3. Idrees Khawaja & Nasir Iqbal, 2019. "Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan," PIDE-Working Papers 2019:160, Pakistan Institute of Development Economics.
    4. Ahsan, Henna & Idrees, Dr Muhammad, 2014. "Impact of Health on Earnings: Individual and District Level Analysis for Pakistan," MPRA Paper 56769, University Library of Munich, Germany, revised 20 Jun 2014.
    5. Ahmad, Shakil & Khan, Imran, 2022. "The impact of globalization, foreign direct investment and trade openness on poverty: a case study of Pakistan," Economic Consultant, Roman I. Ostapenko, vol. 37(1), pages 41-60.
    6. Rashid Naweed & Muhammad Kashif Saeed & Hashim Ali, 2022. "Impact of Human Capital on Poverty Reduction in Pakistan," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 4(3), pages 419-428, September.
    7. Ayaz Ahmed & Nasir Iqbal & Ghulam Mustafa, 2020. "Measuring the Impact of Remittances on Housing Demand: Evidence from Large Cities in Pakistan," PIDE-Working Papers 2020:10, Pakistan Institute of Development Economics.

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    More about this item

    Keywords

    Employers Size; Wage Differential; Human Capital;
    All these keywords.

    JEL classification:

    • 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

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