ECONOMETRIC EVALUATION OF TRAINING ON EARNINGS IN PAKISTAN
Purpose: The purpose of the study is to explore the effects of training on earnings of youth in Pakistan, between ages fifteen years to twenty-five years, considering the recent labour market reforms. The study specifically investigated the impact of on-job and off-job training on employees’ income as an outcome variable.
Design/ Methodology/ Approach: The study applied an econometric technique suggested by Lalonde (1986) to avoid potential specification errors in nonexperimental designs. For estimating the training impact, this study used labour force survey for the period of 2014-15. In the case of Pakistan, most of the studies based on non-experimental research design, estimated the impact of training on employees’ performance using applied parametric techniques and ignored the problem of self-selection bias. This study employed non-parametric propensity score matching technique to control the issue of selection bias occurred due to the choice of workers who received training, particularly in non-experimental designs.
Findings: The findings of the study revealed that after controlling the self-selection, the average treatment effects of both on-job and off-job training on the employees’ earnings are positive and significant.
Originality/ Value: Considering the current policy reforms in Pakistan, the study investigated the impact of off-job and on-job training on employees’ income separately. The outcome of the study will help in evaluating the impact of huge resources, both in physical and monetary terms, diverted towards the government reforms. The study will also identify the future directions needed to equip the population with the required skills to meet the challenges of development such as CPEC.