Self-Selection or Labour Market Segmentation? Evidence from Pakistan (R-4)

Self-Selection or Labour Market Segmentation? Evidence from Pakistan (R-4)

Publication details

  • Saturday | 10 Oct, 1992
  • Nadeem Ul Haque
  • Research Reports,Project Publications
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Abstract

The paper examines the issue of labor market imperfections as reflected in wages in urban Pakistan. The empirical analysis does not find any market imperfections in the determination of wages as support for the hypothesis of self-selection according to comparative advantage. It is also determined that individual self-selection decisions are based on the criterion of expected gain in monthly income which is the product of total labor supplied and the wage rate, and not just relative wage gain. Consequently, both relative wage gain and relative labor supply gains are important in self-selection decisions. This finding would be consistent with behavior in a poorer society where the effort is to maintain a certain minimum level of income.