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

Qaisar Abbas and James Foreman-Peck

No E2007/24, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

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.

Keywords: Rates of return; gender; occupation; Pakistan (search for similar items in EconPapers)
JEL-codes: J16 J18 J24 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-08
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-edu, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published in South Asian Economic Journal (2008), Vol 9, 2, 435-462

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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2007/24

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