Wage Inequality in Pakistan: How Does Contract Status Matter?

Thanh Tam Nguyen-Huu ()
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Thanh Tam Nguyen-Huu: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School

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Abstract: This research investigates the wage gap associated with contract status in Pakistan. The estimation shows that holding a fixed-term written contract (FTC) or no written contract (NWC) instead of a long-term written contract could significantly reduce wages for Pakistani workers. However, the extent of wage inequality depends on how defining contract status. If we rely on the Pakistani national definition of FTC, engaging in an FTC is likely to suffer the highest penalty in terms of hourly wage. Such a finding no longer holds once the international standard definition of FTC is considered. Besides, the wage gaps associated with contract status change if we refer to monthly wage as the independent variable instead of hourly wage. The self-selection into wage workers and endogeneity associated with contract status are carefully taken into account.

Date: 2023-01
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Published in Journal of Developing Areas, 2023, 57 (1), pp.55-68. ⟨10.1353/jda.2023.0003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04248144

DOI: 10.1353/jda.2023.0003

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