Returns to education & Apprenticeship career: policy analysis for Pakistan

Abstract

The constitution of Pakistan under the article 25-A states that: “The State shall provide free and compulsory education to all children of the age of five to sixteen years in such manner as may be determined by law.” Throughout the world different policies are implemented to achieve the goal of universal basic education. Along with other factors such as lack of awareness and quality of education, the persistence of child labor is considered as one of the key elements which acts as a barrier against the achievement of this goal. In the literature child labor is viewed as a source of inefficiency because returns to education are assumed to be larger. The idea that any level of education for attaining human capital is necessarily better than any form of early age work is not correct. Human capital can be attained if child labor takes the form of skilled work. In this case the policies for universal basic education become ineffective. This study uses the cost benefit model developed by Siddique et al., (2019) to compare the present value of lifetime earnings of an agent who chooses an apprenticeship career path with an agent who chooses an education career path. This analysis is based on the fact that the economic agents perceive education and early age skill oriented work as competing career paths and they make a decision by considering the benefits and costs of the given career choices. The agent chooses that career path which yields highest net present value of lifetime earnings. The study gives an alternative explanation as to why the existing policies fail to affect the choices of the agents who choose work career and the goal of universal basic education is not being fulfilled. Additionally the study also shows that early age work may not necessarily be inefficient when compared with lower levels of education. This analysis helps policy makers devise education policy to ensure the achievement of universal basic education by creating liaison between school and work-place such that the skill development of the child and earning of the household is not compromised.