Returns to education in Pakistan

Abstract

This paper investigates whether the education inequality in Pakistan varies across the wage distribution of individuals. We adopt a quantile regression framework, which then uses different quantile spreads to analyse the conditional inequality using the data drawn from the Labour Force Surveys over the 1990 to 2003 time-period. The analysis also shows how the return to education varies when different sets of variables or combinations are used. Education coefficient decreases when post-education decisions are introduced. This paper uses pooled data as well as pseudo panel approaches, as the LFS are not continuous in cross-section surveys and findings suggest that results obtained from the pseudo panel approaches are more robust than the pooled sample data. The estimates also show that the evidence of conditional education inequality in Pakistan, and also that inequality has increased over the years. The conditional inequality has been increased from 1.13 to about 1.26 in the 1990 to 2003 sample period. Estimates have also been produced for different levels of education and categories like provinces, gender, area of living, and industries. The highest increase in conditional education inequality is found for the person who has completed the Matriculation or Intermediate qualification as compared to all other educational levels. © The Pakistan Development Review.