Education, Employment and Earnings in Pakistan

The policy brief aims to identify the potential impact of education on increasing labor productivity, enhancing income, alleviating poverty and providing gender equality within labor market. Three studies based on estimating private returns to schooling and cognitive skills are conducted on data generated from Pakistan Integrated Household Survey (1999 or 2001) and RECOUP (Research Consortium on Educational Outcomes and Poverty) 2007 in Punjab and N.W.F.P. The analysis reveals that attainment of education reduces the gender gap in male and female income by providing women access to lucrative job markets and therefore there is a need to design policies that enhance accessibility to girls schooling whereas public messages must promote benefits of women literacy. Women rate of return of schooling and literacy skills is higher than males in all occupations and from a policy outlook, there is a need to reform labor market polices such that differential treatment by employers is reduced. Social policies must be re-designed and must focus on subsidizing girl’s education and providing them various cash incentives in order to increase girl’s enrollment within Pakistan.

The study indicates that education-earning relationship is convex whereby higher returns are generated at higher educational levels and this highlights the need to strengthen institutes providing higher level of education. The study concludes that primary education is the key to literacy, numeracy and higher levels of education and therefore quality of schools must be raised through specific policies that enhance accessibility and raise retention and enrollment rates.