WAGE INEQUALITY WITHIN AND BETWEEN OCCUPATIONS: A CASE STUDY OF PAKISTAN

Abstract

This study investigates wage inequality within and between occupations in Pakistan, using data from the Labor Force Survey (LFS) for 2010‑11 and 2020‑21. It is among the first studies to decompose overall wage inequality in Pakistan into between-occupation and within-occupation components. The variance of log wages framework, combined with growth curve regression, is employed for this decomposition. Key findings reveal that the gender wage gap increased from 0.84% in 2009 to 1.04% in 2020, while between-occupation inequality declined over the period. Conversely, within-occupation inequality increased significantly, rising from 1.04% to 1.104%. Education was found to play a critical role in moderating wage inequality, particularly between occupations. The study recommends targeted policy interventions including investment in education and training, enforcement of equal pay legislation, and strengthening of collective bargaining mechanisms.