Schooling is Associated not only with Long-run Wages, but also with Wage Risks and Disability Risks: The Pakistani Experience.

Asma Hyder, Jere R. Behrman


Many studies document significantly positive associations
between schooling attainment and wages in developing countries. But when
individuals enter occupations subsequent to completing their schooling,
they not only face an expected work-life path of wages, but a number of
other occupational characteristics, including wage risks and disability
risks, for which there may be compensating wage differentials. This
study examines the relations between schooling on one hand and mean
wages and these two types of risks on the other hand, based on 77,685
individuals in the labour force as recorded in six Labour Force Surveys
of Pakistan. The results suggest that schooling is positively associated
with mean total wages and wage rates, but has different associations
with these two types of risks: Disability risks decline as schooling
increases but wage risks, and even more, wage rate risks increase as
schooling increases. The schooling-wage risks relation, but not the
schooling-disability risks relation, is consistent with there being
compensating differentials. JEL classification: J31, J28, O53 Keywords:
Wages, Risks, Labour Markets, Job Disabilities, Compensating
Differentials, Developing Country, Schooling

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