Jamshed Haidery

Abstract

 

According to the theory of human capital, education plays a significantly positive role in the formation of human capital, socio-economic growth, and prosperity of a nation. The primary data was used to estimate the premium of education and gender as well as sector disparities of wages in Afghanistan. The benchmark human capital model of Becker and Mincer (1961) were used to quantify the returns to education years and splines. The results revealed that the human capital model seems to be a satisfactory approach to explaining wage disparities among different education years and levels. The wage premium of education was substantial and significant, most important, the returns for higher education are substantially higher when compared to international reported results. Women earn significantly less than their male counterparts do. This difference can be due to human capital endowment distribution or to females working in structurally low-paying jobs. Surprisingly, private sector workers enjoy significantly higher wages as compared to their public sector counterparts. The persistent wage gap in favor of the private sector can cause the public sector in the long run to face a lack of experienced, skilled, and professional workers. The impacts of non-human capital factors were also significant, particularly contract duration and job characteristics.

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