Academic journal article The Lahore Journal of Economics

Preparing Women of Substance? Education, Training, and Labor Market Outcomes for Women in Pakistan

Academic journal article The Lahore Journal of Economics

Preparing Women of Substance? Education, Training, and Labor Market Outcomes for Women in Pakistan

Article excerpt


This paper investigates the economic (i.e., labor market) outcomes of "training" for individuals in Pakistan. The labor market benefits of general education have been relatively well explored in the literature and specifically in Pakistan. They point to the benefits of education accruing both from education or skills that promote a person's entry into more lucrative occupations and from raising earnings within any given occupation. This research delves into another angle by investigating the role, if any, of acquired "training"-technical, vocational, apprenticeship, or on-the-job-and its impact through both channels of effect on economic wellbeing. This is done using data from a unique, purpose-designed survey of more than 1,000 households in Pakistan, collected in 2007. Multinomial logit estimates of occupational attainment show how training determines occupational choice. In addition, we estimate the returns to schooling and to training separately for men and women. The results show that, while training significantly improves women's chances of entering self-employment and wage work (as well as the more "lucrative" occupations), only wage-working women benefit from improved earnings through the training they have acquired. On the other hand, men who have acquired skills this way benefit through an improved probability of being self-employed and earning higher returns within that occupation.

Keywords: Returns to schooling, vocational training, apprenticeship training, occupational choice, Pakistan.

JEL classification: I21, J16, J24.

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1. Introduction

Individuals and firms undertake education and training as an investment to increase their earnings and productivity-the basic tenet of human capital theory (Becker, 1964). Within this context, the returns to general education, measuring the benefit (measured as increased earnings) of each additional year (or level) of schooling, have been the focus of immense research scrutiny. Education's critical role in determining and enhancing individuals' labor market outcomes is well documented in the literature.

Several recent studies on Pakistan have also shown this to be the case, for instance by showing that the labor market benefits of education and skills may accrue by facilitating entry to more lucrative occupations and, within occupations, by raising earnings. These associations, for example, have been investigated by Aslam, Kingdon, and Söderbom (2008) and more recently by Aslam, De, Kingdon, and Kumar (2012) who analyze the relationship between schooling and cognitive skills on the one hand, and occupational choice and earnings on the other. The authors find that education and skills significantly enhance individuals' chances of entering the more "rewarding" occupations and of raising their earnings within these occupations. This is especially true for women, suggesting that education can play a critical role in enhancing labor market outcomes for women in Pakistan.1

However, across the globe and particularly in Asia, the level of female participation in the labor force varies dramatically across countries and different contexts. According to the United Nations Development Programme, Pakistan ranked 146 out of 187 with a gender inequality rank of 115 out of 146.2 The country's female population accounts for 49.11 percent of the whole population and 63 percent of the rural population. Female labor participation is exceptionally low, with women in South Asia more likely to be involved in the agricultural sector and as unpaid workers compared to any other region in the world. For Pakistani women, as for other South Asian women, the decision to participate in the labor force is determined not only by market forces but, to a large degree, by nonmarket factors as well.

Having said this, female labor force participation is on the rise and is estimated to have increased from 13.9 percent in 1990 to around 23 percent in 2010. …

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