Education and Earnings in Pakistan

The conventional theory of human capital developed by Becker (1962) and Mincer (1974) views education and training as the major sources of human capital accumulation that, in turn, have direct and positive effect on individuals’ life time earnings. In the Mincerian earning function, the coefficient of school years indicates the returns to education, i.e., how much addition in earnings takes place with an additional school year. There exists a wide range of literature that estimated the rates of returns to education for different countries [Pascharapoulos (1980; 1985; and 1994); Pascharapoulos and Chu Ng (1992)]1.