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Wage differentials, rate of return to education, and occupational wage share in the labour market of Pakistan

Hyder, Asma (2007) Wage differentials, rate of return to education, and occupational wage share in the labour market of Pakistan. PIDE-Working Papers (2007:17). Pakistan Institute of Development Economics, Islamabad, Pakistan.

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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

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2007 Pakistan Institute of Development Economics
Divisions: Asia Centre
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: J - Labor and Demographic Economics > J4 - Particular Labor Markets > J45 - Public Sector Labor Markets
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J32 - Nonwage Labor Costs and Benefits; Private Pensions
Date Deposited: 17 Mar 2009 11:04
Last Modified: 18 May 2024 05:57

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