Measuring Educational Returns and Productivity in Pakistan

Abstract

Since the era of Adam Smith, education has been recognized as pivotal for economic growth and individual development; however, its effectiveness depends on aligning the quality of education with labour market demands. In Pakistan, policymakers must ensure that educated people do not increase the pool of the unemployed labour force while designing policies for education expansion. The present study has estimated the returns to education in Pakistan using the labour force survey 2020-21. Study finds that education has a strong positive impact on earnings. It has been found that returns to education vary based on the level and type of education. Specialized fields like engineering, computer science, and medicine offer the highest returns, while fundamental and technical education at the primary, secondary, and intermediate levels portray relatively low or insignificant returns. The executives (756,917) and professionals (493,735) enjoy higher earnings, whereas agriculture workers (248,109) and unskilled workers (188,659) are at the bottom. Executives in Punjab earn the highest earning (807,988), followed by Sindh (722,349), Baluchistan (703,191), and KP (626,538). Professionals in Sindh earn the highest earning (581,120), followed by Baluchistan (565,595), Punjab (472,167), and KP (438,330).