Trends in Intersectoral Wages in Pakistan

In Pakistan intersectoral wage trends have been analysed by Guisinger and Hicks (1978); Irfan (1982) and Irfan and Ahmed (1985). The studies show that over the period 1970 to 1984 real wages of the large-scale manufacturing, construction and agriculture sectors increased while that of the government employees declined significantly. The study shows international migration to be one of the major determinants of the rise in real wages, in addition to important policy interventions. The present study is an extension of Irfan and Ahmed's work. It has been undertaken for two reasons. First there is great scarcity of empirical evidence on this very important issue. Second, the more important factor is the sharp reversal in one of the major variables - out migration. Since 1981 there has been net return migration. This phenomenon a priori is expected to upset the labour market and the wage rates in the opposite direction. The study is planned as follows: Section II describes the trends in real wages between the formal and informal sectors.! Section III describes the factors behind the observed trends in real wages, and finally Section IV gives the conclusions of the study.