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Private Returns to Education in Pakistan: A Statistical Investigation

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  • Jamal, Haroon

Abstract

The paper statistically evaluates the trends in private returns to education in Pakistan for the period 1990-91 to 2012-13. The data of 16 nationally representative Labor Force Surveys during this period are utilized to estimate the standard Mincerian Earning Functions with some modifications. Trends are also disaggregated for gender, region, province, sectors and educational attainments. In addition, the study also employs the pseudo-panel approach for the first time in Pakistan for estimating overall returns to education to control unobserved individual heterogeneity which is common to estimate returns from data on individuals. The estimate using the traditional approach with individual LFS cross-section data suggests 5.5 percent yearly returns for wage earners after controlling for the heterogeneity in the regional and provincial labor markets in Pakistan. Nonetheless, the study found considerably larger returns to education from the pseudo-panels with year fixed effects. The estimates of earning equation with birth specific cohort data reveal about 9.2 percent returns for overall Pakistani labor market.

Suggested Citation

  • Jamal, Haroon, 2015. "Private Returns to Education in Pakistan: A Statistical Investigation," MPRA Paper 70640, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:70640
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    File URL: https://mpra.ub.uni-muenchen.de/70640/1/MPRA_paper_70640.pdf
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    References listed on IDEAS

    as
    1. Farhan Sami Khan & Imran Ashraf Toor, 2003. "Changes in Returns to Education in Pakistan: 1990-2002," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 8(2), pages 85-98, Jul-Dec.
    2. Madeeha Gohar Qureshi, 2012. "The Gender Differences in School Enrolment and Returns to Education in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(3), pages 219-256.
    3. Rozana Himaz & Harsha Aturupane, 2011. "Education and Household Welfare in Sri Lanka from 1985 to 2006," Economics Series Working Papers 527, University of Oxford, Department of Economics.
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    5. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    6. Stanovnik, Tine, 1997. "The returns to education in Slovenia," Economics of Education Review, Elsevier, vol. 16(4), pages 443-449, October.
    7. Verbeek, Marno & Nijman, Theo, 1993. "Minimum MSE estimation of a regression model with fixed effects from a series of cross-sections," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 125-136, September.
    8. Zafar Mueen Nasir & Hina Nazli, 2000. "Education And Earnings In Pakistan," PIDE-Working Papers 2000:177, Pakistan Institute of Development Economics.
    9. 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.
    10. 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.
    11. Warunsiri, Sasiwimon & McNown, Robert, 2010. "The Returns to Education in Thailand: A Pseudo-Panel Approach," World Development, Elsevier, vol. 38(11), pages 1616-1625, November.
    12. Pedro Telhado Pereira & Pedro Silva Martins, 2004. "Returns to education and wage equations," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 525-531.
    13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    14. Abbas, Qaisar & Foreman-Peck, James, 2007. "The Mincer Human Capital Model in Pakistan: Implications for Education Policy," Cardiff Economics Working Papers E2007/24, Cardiff University, Cardiff Business School, Economics Section.
    15. Monazza Aslam, 2009. "Education Gender Gaps in Pakistan: Is the Labor Market to Blame?," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 747-784, July.
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    More about this item

    Keywords

    Returns to education; Mincerian Earnings Function; Pseudo-Panel; Pakistan;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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