Returns to Education in Pakistan
In: The Pakistan development review: PDR, Band 46, Heft 4II, S. 833-852
There is an extensive empirical literature on returns to
education that focuses both on developed and developing countries.
Available literatures in developing countries compare the returns to
academic education and vocational education [Nasir and Nazil (2000)], or
seek to identify the impact of completing a given schooling cycle on
earnings [Appleton (2001)]. The aim of this study is to contribute the
literature by conducting a systematic analysis on returns to education
and education inequality in Pakistan. In particular it asks to what
extent inequality for different level of education vary across the wage
distribution. In order to address simultaneously the two issue of return
to education and education inequality, study adopt a quantile regression
framework. A characteristic of the wage and salary structure of most
countries is that people with more education tend to receive higher
remuneration than those with less [Colclough (1982)]. To do so, the
paper has used data drawn from Labour Force Surveys, conducted by
Government of Pakistan for the time period between 1990 and 2003, which
contains eight different surveys, using methodology developed by Agrist,
et al. (2006), where weighted least squares interpretation of Quantile
Regression is used to derive an omitted variables bias formula and a
partial quantile regression concept, similar to the relationship between
partial regression and OLS. Estimation uses personal and household
characteristics, occupational and employment characteristics in order to
assess the education inequality. Empirical estimates indicate that
education inequality is much higher for the middle level educates
compare to educate that has less education or high level education and
qualifications. The education level coefficients decrease when different
sets of exogenous variables are introduced in the estimation equation.
Analysis also suggests the existence of the education inequality across
different areas and regions and over the time it has
increased.