Exploring The Wage Differentials Among Various Sectors And Major Occupational Groups In Major Cities Of Pakistan

This study focuses on the presence of wage differentials in Pakistan and also on the determinants that originates it. Since there are a smaller number of studies that are conducted on this topic in Pakistan, the current study aims to contribute in bridging the existing gap in this particular research genre. Hence, this study not only generates the desired results but it also contributes into the overall researches on the economy of Pakistan.The preceding works that are done to research wage differentials and wage determinants have used numerous theories and approaches to reach their goals. The current study, in order to analyze the determinants affecting the differences in pay scales among the wages of employees in the establishing economy, deals with the study of a number of such theories and approaches that are supposed as being beneficial for the purpose. This study undertakes the explanation of wage differentials in Pakistan by focusing on wage differentials in public and private sectors, formal and informal sectors, and major occupational groups. The study uses "Wage Theory" to examine wage differentials among employees pertaining to both the genders, in the public as well as private sectors on varied levels of working conditions. This study also uses "Segmented Labor Market Theory" to determine the wage differential in both public and private sectors, formal and informal, and major occupational groups in Pakistan. So, the author has used various econometric techniques in order to explain and test these theories and to find out the required results.Using these theories and approaches as working models, the current study aims at presenting theoretical and empirical analysis. This study also concentrates on examining some such noticeable aspects that either indirectly or directly impact the wage differentials and wage determination in the range of this research. Hence this study selects the models which are based on the theories used in the research and furnishes evidences by earlier empirical researches.The major estimations in this study are established by the computing of the wage equation according to household, specific personal, and workplace characteristics. In order to achieve the mentioned goals, this research has used seven different cross-sectional labor force surveys which are conducted by Pakistan Bureau of Statistics targeting the duration from2006-07 to 2012-13.Gender equality is not only a policy reform agenda for developing countries but also an important goal of Millennium Development. With respect to all socio-economic indicators, the history demonstrates extremely gloomy image of gender inequality in Pakistan. With this background this study investigates the nexus between wage inequality and economic growth and detects co-integration between gender wage differential and economic growth using ARDL bound test. It is confirmed from the empirical results that there exists long-run relationship between economic growth and wage differential. The findings of unrestricted error correction model indicate that the wage inequality showed negative and significant impact on economic growth in the long run. The results of this study showed dissimilarity with the findings of Seguino(2000) that there exists constructive association between wage inequality and economic growth. An important finding from the present examination is that the gender wage gap is detrimental for the process of growth in long run. Policies should be made to reduce gender wage gap. Such government policy should be designed which could address and adjust economic priorities in the face of changing global economic realities and provide comprehensive framework for conducive environment for gender.Our Study indicated that half of the total female employees from fourteen major cities of Pakistan were employed in the government sector. Of total female employees in private sector, 66 percent work in formal and 33 percent shown to be employed in the informal sector. Final data demonstrates the formal sector as being leading in range as far the employment is concerned as compared to the informal private sector. This shows that permanent female employment is high in the formal sector(in public as well as private sectors). Results also indicated that both men and women were paid more in the public sector compared to the private sector counterparts. Among the total female employees, only 9 percent had received any formal training, 52% were married and average years of schooling were 11 years.Further, our findings regarding wage differential between genders indicate that wage gap is lower in public sector as compared to private sector. In proportion, gender wage ratio was found to be 0.96, 0.62 and 0.66 in public, formal private and informal private sectors respectively. This suggests that in the given situation, private sector female workers having the pay structure as compensated at a lower endowments rate as then public sector employees as compared to their counterparts.