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The Mincer Human Capital Model in Pakistan

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  • Qaisar Abbas
  • James Foreman-Peck

Abstract

This article estimates and interprets returns to education for three sub–sectors of the labour market, by gender, in Pakistan, using the most recent data set of the Pakistan Social and Living Standards Measurement (PSLM) Survey, 2004–05. The results show two distinctive features of Pakistani education: the high apparent returns to female education outside agriculture and the remarkable increase of returns with successive levels of education, which are to be explained primarily by two departures from the basic Mincer model—generally poor quality primary schooling and family unwillingness to invest in female education because of a lack of earning opportunities. There is some signalling in Pakistani education investment, but the education is mainly a productivity–enhancing investment in human capital, according to a comparison of self–employed and paid employed earnings equations. Returns to the public spending of education are extremely high, suggesting considerable state underinvestment. The policy challenge is in the low wages and high education in the female paid employment sector, and the low participation rate.

Suggested Citation

  • Qaisar Abbas & James Foreman-Peck, 2008. "The Mincer Human Capital Model in Pakistan," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 9(2), pages 435-462, September.
    • Handle: RePEc:sae:soueco:v:9:y:2008:i:2:p:435-462
    DOI: 10.1177/139156140800900209
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    References listed on IDEAS

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    1. Behrman, Jere R & Deolalikar, Anil B, 1995. "Are There Differential Returns to Schooling by Gender? The Case of Indonesian Labour Markets," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 97-117, February.
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    Cited by:

    1. Nasir Iqbal & Musleh Ud Din & Ejaz Ghani, 2012. "Fiscal Decentralisation and Economic Growth: Role of Democratic Institutions," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(3), pages 173-195.
    2. 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.
    3. Aamir Khan & Himayatullah Khan, 2020. "Return to Schooling for Public and Private Sector Higher Education Institutions of Khyber Pakhtunkhwa-Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 125-131.
    4. Abeer Mohamed Ali Abd Elkhalek, 2021. "Education for Sustainable Development: A Critical Analyses," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(6), pages 181-181, June.
    5. Günther Fink & Evan Peet, 2016. "Returns to Education in Low and Middle-Income Countries: Evidence from the Living Standards and Measurement Surveys," PGDA Working Papers 12014, Program on the Global Demography of Aging.

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