Sources of Earnings Differentials Among Migrants and Natives‪.‬

An attempt has been made in this paper to determine the sources of earning differentials among migrants and natives in Pakistan. The theoretical basis of the analysis lies in the theories of human capital, and discrimination. To account for the non-randomness of the migration decision, the methodology part is strengthened by introducing correction for sample selection bias in the earnings model using Heckman's procedure. The important conclusions that emerged from this study are the following. Migrants, in general, perform better on account of their better endowments, especially education. On the other hand, the most important contributing factor of earnings of natives is their potential years of job experience. In terms of pay structure, the natives are favoured over migrants. However, depending upon the choice of the decomposition procedure, the range of the earnings differential between the two categories of workers is fairly large. I. INTRODUCTION