Preference for Public Sector Jobs and Wait Unemployment: A Micro Data Analysis

This paper exploits responses on the stated preferences for public sector jobs among a sample of unemployed in Pakistan to inform on the existence of public sector job queues. The empirical approach allowed job preference to influence unemployment duration. The potential wage advantage an unemployed individual would enjoy in a public sector job was found to exert no independent influence on the stated preference indicating that fringe benefits and work conditions are perhaps more important considerations. The stated preference for a public sector job was found to be associated with higher uncompleted durations. The estimated effect suggests that, on average and controlling for education and other characteristics, those unemployed who stated a preference for public sector jobs had higher uncompleted durations of between four and six months. This finding was taken to confirm that there are long queues for public sector jobs in Pakistan.Wage Differentials, Wage Structure, Unemployment: Models, Duration, Incidence, and Job Search

Wage Differentials, Rate of Return to Education, and Occupational Wage Share in the Labour Market of Pakistan

This paper examines the magnitude of public/private wage differentials in Pakistan using data drawn from the 2001-02 Labour Force Survey. Pakistan Labour Force Survey is a nationwide survey containing micro data from all over the country containing demographic and employment information. As in many other countries, public sector workers in Pakistan tend to have higher average pay and educational levels as compared to their private sector counterparts. First, this paper presents the inter-sectoral earning equations for the three main sectors of the economy, i.e., public, private, and state-owned enterprises. These results are further decomposed into treatment and endowment effect. To examine the role of human capital in wage gap, the rate of return to different levels of schooling is calculated. These rates of return to education may be important for policy formulation. The relative earning share is also worked out to look into the distribution of wages across the occupational categories. The earning equations are estimated with and without correction for selectivity, which is also the main objective of the study, i.e., to find out if any non-random selection is taking place within these three sectors of employment.Wage Differentials, Rate of Return to Education, Public Sector Labour Markets

Exchange Rate Pass-Through to Domestic Prices in Pakistan

This paper assesses the extent to which the movements in exchange rate affect domestic wholesale and consumer prices in Pakistan by analyzing data from January 1988 to September 2003. The empirical model is a recursive VAR, suggested by McCarthy (2000), incorporating a distribution chain of pricing. Impulse response function and variance decomposition are used to measure the exchange rate pass-through to domestic prices. The major findings of this paper are: (1) the exchange rate movements have only a moderate effect on domestic prices, i.e., exchange rate pass-through is low; (2) the exchange rate pass-through is more stronger in wholesale price index (WPI) relative to consumers price index (CPI); (3) the impact of pass-through on domestic prices spreads over 12 months, however, the effect is mostly felt in the first four months; (4) the exchange rate pass-through to consumer prices have further weakened after the free float of Rupee/Dollar parity in July 2000; (5) within the WPI commodity groups, the exchange rate pass- through is stronger in ‘Fuel & Lighting’ and ‘Manufactures’ groups while in the case of CPI, pass-through is more pronounced in ‘Transport & Communication’ and ‘Fuel & Lighting’ group. Furthermore, the exchange rate pass-through to domestic prices is much stronger in higher inflationary environment during Jan-88 to Dec-97 relative to lower inflationary environment down the road.Exchange Rate Pass-through, Domestic Prices, Impulse Response Function, Variance Decomposition

The Public Sector Pay Gap in Pakistan: A Quantile Regression Analysis

This paper examines the magnitude of public/private wage differentials in Pakistan using data drawn from the 2001/02 Labour Force Survey. As in many other countries, public sector workers in Pakistan tend both to have higher average pay and education levels compared to their private sector counterparts. In addition, the public sector in Pakistan has both a more compressed wage distribution and a smaller gender pay gap than that prevailing in the private sector. Our empirical analysis suggests that about two-fifths of the raw differential in average hourly wages between the two sectors is accounted by differentials in average characteristics. The estimated ceteris paribus public sector ‘mark-up’ is of the order of 49% and is substantial by the standards of developed economies. The quantile regression estimates suggest that the ‘mark-up’ was found to decline monotonically with movement up the conditional wage distribution. In particular, the premium at the 10th percentile was estimated at 92% compared to a more modest 20% at the 90th percentile.

Poverty, Income Distribution and Social Development in Lahore

In this paper we present a comparative analysis of poverty and income inequality prevalent in the seven towns of Lahore. Further, an analysis of gender inequality and overall social development is presented by considering education, health, and labor market conditions. We have computed the Herfindahl Index, Gini Coefficient, ratio of share of income of the bottom 20% to the top 20% and Sen index in this study. Finally, a composite index of social development is estimated and on the basis of this, index ranking of each town is outlined. Nishter Town is the least socially developed town whereas Aziz Bhatti, Shalimar, and Allama Iqbal towns are less socially developed as compared to Ravi, Cantt and Gunj Buksh towns.Poverty, Income distribution, Gini, Lorenz curve, Gender inequality, Social Development, Lahore, Pakistan