Ethnicity and Earnings: An Analysis of Data for Karachi

Pakistan is today, a case study in ethnic strife. Carved out of pre- Independence India in 1947, the country is home to five broad ethnic groups: Punjabis (the dominant segment of the population), Balochis, Pathans and Sindhis. Each has a distinctive culture and language. In spite of broad similarities stemming from a common religion (more than 98 percent of the population is Muslim), several factors combine to create dissension and discord. The fifth ethnic group in Pakistan are the Muhajirs (which literally translates to “Immigrants”) who migrated to Pakistan in large numbers from India in 1947. Most of them settled in Karachi. Pakistan’s largest city, a teeming port city with a current population of around 12 million. Charges of favouritism in the award of jobs abound, and the Muhajirs in particular allege that, not being “sons of the soil,” they are singled out for discriminatory treatment. Given that this is the case, it is surprising that no study has been carried out to ascertain if indeed, earnings differences originate from ethnic differences in Pakistan. This study attempts to examine this issue, and thus settle questions that have led to many a pitched argument.

An Analysis of the Male-Female Earnings Differential in Pakistan

Several articles have examined the status of women in developing countries. But while numerous studies have attempted to estimate the extent of wage discrimination against women in the west, few such studies have been conducted for Third World cOWltries. The only such published study for Pakistan appears to be Ashraf and Ashrafs (1993) examination of the gender earnings differential for Rawalpindi City. Given the very restricted sample (based on just one city in Pakistan) and the relatively dated data (from 1975) used in that study, a need clearly exists for a more comprehensive examination of earnings by gender. This article represents the first intensive look into male-female earnings differentials, not only for Pakistan as a whole, but for each of its four provinces individually as well. Gender earnings differentials have also been calculated for a number of industrial subgroups. Computations have been made for the years 1979 and 1985-86.1 This allows the trend in the gender earnings gap to be tracked over that period. Data from the Household Income and Expenditure Surveys are used in the estimations for both the Oaxaca (1973) model as well as the more recently developed Cotton (1988) and Neumark (1988) models. A new twist is the incorporation of correction for selectivity bias in the sample data which strengthens the methodological underpinnings of the model