Earnings Functions in Pakistan's Urban Informal Sector: A Case Study (Human RESOURCE Development) (Report‪)‬

I. INTRODUCTION The informal sector is frequently attacked on the grounds that it offers very low earnings in very unfavourable and exploitative working conditions with no prospects for upward mobility for its participants. Since entry in this sector is not restricted, therefore, it is argued that a mushroom growth of labour supply takes place particularly at times when growth in the formal sector slows down [Richardson (1984)]. Therefore, earnings in this sector do not reflect variations in personal capabilities on account of human capital endowments. As a result, it is opined that workers in this sector face a flat age-earnings or experience-earnings profile because they are not rewarded for their schooling and accumulated experience with age.