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Sector-wise earning differential: empirical evidence on segmentation theory from Pakistan

Shumaila Riaz (School of Economics, Bahauddin Zakariya University, Multan, Pakistan)
Muhammad Zahir Faridi (School of Economics, Bahauddin Zakariya University, Multan, Pakistan)

Journal of Economic and Administrative Sciences

ISSN: 2054-6238

Article publication date: 15 August 2024

12

Abstract

Purpose

Segmentation theory argues that the labor market is composed of a variety of non-competing segments between which rewards to human capital are determined by institutional structures. This paper presents new evidence on sector-wise earning differential for both male and female samples to assess the implications of segmentation theory.

Design/methodology/approach

Primary data is collected through simple random sampling technique with a survey questionnaire from 954 employed individuals of Southern Punjab, the less developed region of Pakistan. OAXACA decomposition technique is adopted to estimate earning differential.

Findings

Empirical estimates of OAXACA decomposition reveal that the extent of discrimination between public and private sector is greater in case of females than in male samples. Education and region are crucial factors behind sector-wise earning differential for both male and female samples. Job characteristics are more valued than occupation to explain sector-wise earning differential. Occupation largely contributes to explain public–private sector earning differential in male sample than in female sample. Moreover, job security is highly valued by females than males.

Originality/value

Segmentation of the institutional structure in a developing economy is empirically verified by using primary data due to non-availability of data on some variables from secondary data sources. This study attempts to explore the key factors of public–private sector wage differential for male and female samples separately due to the differences in their preferences for work and earning functions.

Keywords

Citation

Riaz, S. and Faridi, M.Z. (2024), "Sector-wise earning differential: empirical evidence on segmentation theory from Pakistan", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-10-2023-0286

Publisher

:

Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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