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The Mincer Human Capital Model in Pakistan: Implications for Education Policy

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Abstract

This paper estimates and interprets returns to education for three sub-sectors of labour market by gender in Pakistan, using the most recent data set of 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, 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 lack of earning opportunities. There is some signaling in Pakistani education investment but mainly the education is productivity-enhancing investment in human capital, according to a comparison of self-employed and paid employed earnings equations. Returns to public spending of education are extremely high, suggesting very 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.

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  • 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.
    • Handle: RePEc:cdf:wpaper:2007/24
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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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    1. A. Z. Nowak & Gangadhar Dahal, 2016. "The contribution of education to economic growth: Evidence from Nepal," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 5(2), pages 22-41, June.
    2. Natavan Namazova, 2023. "Changing the Level of Education and Career Choice Depending on the Socioeconomic Status of the Family: Evidence from Azerbaijan," Sustainability, MDPI, vol. 15(22), pages 1-13, November.
    3. 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.
    4. Jamal, Haroon, 2015. "Private Returns to Education in Pakistan: A Statistical Investigation," MPRA Paper 70640, University Library of Munich, Germany.
    5. 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.
    6. 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.
    7. 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.
    8. 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.

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    More about this item

    Keywords

    Rates of return; gender; occupation; Pakistan;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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