Rates of Return to Education by Gender in Pakistan

The objective of this study is to analyze the returns to education and total labor market for males and females and consider whether childhood and adolescent investment decisions are influenced by the estimated returns from the labor market. Methodologies including Ordinary Least Squares, Heckman correction, 2SLS and household fixed effects are used on data extracted from Pakistan Integrated Household Survey (PIHS) 2002 and results surprisingly reveal that economic returns to higher education are 13-18% for women as opposed to only 7%-11% for males. Conversely, gender discrimination existing within the labor market reveal that total labor market return for men are significantly higher than for women.

Despite higher returns to education, women face lower educational opportunities and this might be explained by the fact that return to education for parents are significantly less for daughters as opposed to sons whereby marriage of daughter transfers the benefits to in-laws or the husband. The research also reveals the convex nature of education-earning relationship which might dilute the efficiency rationale for investment in primary education. The study also highlights that women face a high wage return to low education level which might be attributable to scarcity of female labor in job market.