Title

Income differentials in the Police and Taxation department employees in Peshawar

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Abstract/Description

The study examines wage-risk relationship among the employees of Police and Excise & Taxation Departments in Peshawar, Pakistan. The city paid the highest price in the countries’ war-on-terror with the largest death toll and miseries of inhabitants belonging to all walks of life. Working in police is considered risky whereas, employment in Excise & Taxation department is non-risky. The salary structures are similar in both the Bureaus except for receipts due to facing on-job hazards. Primary data are collected from Peshawar city through structured questionnaires and a Probit risk selection model is estimated for both the organizations to assess the effects of injury compensations and social security packages provided to the employees. Inverse-Mills-Ratio is calculated through the model estimation and incorporated into the hedonic wage models separately for both departments. Inverse-Mills-Ratio is induced to reduce the sample selection bias. Furthermore, Oaxaca-Blinder decomposition analysis is employed for comparing incomes in the departments to find the difference between the incomes of the respondents. The employed methodology enables us to decompose the differential into explained and unexplained parts. The study finds that higher injury compensations and social security packages are provided to employees in risky jobs, which is consistent with the theory.

Session Theme

Economic Uncertainty and Financial Inclusion - Session IB

Session Type

Parallel Technical Session

Session Chair

Dr. Farooq Arby, Director Research, State Bank of Pakistan

Session Discussant

Dr. Ashraf Khan, Assistant Professor, Institute of Business Administration, Karachi

Start Date

2-4-2021 2:30 PM

End Date

2-4-2021 4:00 PM

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Apr 2nd, 2:30 PM Apr 2nd, 4:00 PM

Income differentials in the Police and Taxation department employees in Peshawar

The study examines wage-risk relationship among the employees of Police and Excise & Taxation Departments in Peshawar, Pakistan. The city paid the highest price in the countries’ war-on-terror with the largest death toll and miseries of inhabitants belonging to all walks of life. Working in police is considered risky whereas, employment in Excise & Taxation department is non-risky. The salary structures are similar in both the Bureaus except for receipts due to facing on-job hazards. Primary data are collected from Peshawar city through structured questionnaires and a Probit risk selection model is estimated for both the organizations to assess the effects of injury compensations and social security packages provided to the employees. Inverse-Mills-Ratio is calculated through the model estimation and incorporated into the hedonic wage models separately for both departments. Inverse-Mills-Ratio is induced to reduce the sample selection bias. Furthermore, Oaxaca-Blinder decomposition analysis is employed for comparing incomes in the departments to find the difference between the incomes of the respondents. The employed methodology enables us to decompose the differential into explained and unexplained parts. The study finds that higher injury compensations and social security packages are provided to employees in risky jobs, which is consistent with the theory.