Regional Earning Differentials in Pakistan: Does Age Makes a Difference?


  • Zopash Khan Lecturer, Kashmir Institute of Economics, The University of Azad Jammu & Kashmir, Muzaffarabad


To investigate regional earning differentials in Pakistan, Data has been taken from Pakistan Social and Living Standard Measurement. Analysis has been carried out for all, young and old earners. Earning differences are decomposed by using the Oaxaca decomposition technique. Results indicate that old earners face less discrimination as compared to young earners in rural areas. Income differences of 31.6% for all earners, 34.6% for young earners, and 21.5% for old earners are due to regional (urban and rural) factors, which indicates discrimination towards rural workers. Overall, urban workers earn 27% more than rural workers. The impact of education on earnings is higher for urban workers than for rural workers in the case of all earners. The impact of the relatively lower level of education on wages is more in rural areas than in urban areas for young earners. As young earners receive higher education i.e. above graduation, the impact of education is more on earnings if worker resides in an urban area. Furthermore, the impact of the lowest level of education on the earning of workers is more in rural areas than in urban areas for old earners, but as education increases impact is stronger for old earners in urban areas. Based on the results, few policy implications have been discussed.