Returns to Education and Gender Differentials in Wages in Pakistan

Abstract

Education is one of the most important factors in human development. The data from two household surveys were used to estimate the returns to education and gender disparities in wages in Pakistan. The model, an extension of Becker and Mincer models, was used to quantify the returns to investment in education. The results revealed that income gaps attributable to education level were significant. Income gaps between educated and uneducated workers in first-time employment also tend to increase with experience. Women earn significantly less than their male counterparts. These differences may be interpreted as the maximum possible effect of discrimination against women. Women also earn less because they acquire less cumulative work experience than men, as a result of breaks in their work histories, owning to the demand of motherhood and domestic chores. Education quality was much lower for students from poor families; the majority of these poor attended public school and did not have access to better quality private schools. Such differences strengthened the influence of the distribution of education and the structure of returns on income concentration.