DOES COMPENSATING WAGE DIFFERENTIALS EXSIST IN THE FORMAL SECTOR IN PAKISTAN?

The purpose of writing this paper was to find out the validity of the Compensating Wage Differentials in Pakistan and to use the analysis to find out the Value of Statistical Life and Injury for the country. This is a pioneering work. The study has focused on evaluating the compensating wage differential among the blue-collar industrial workers in Lahore. The survey was conducted in all parts of Lahore from May 2009 to October in the same year. Based on the estimation results of four alternative hedonic wage equations, the Value of Statistical Life (VSL) for Pakistan has been estimated to be25.16 million PKR per statistical life. Moreover, the Value of Statistical Injury (VSI) has been estimated to be 111,000 PKR per statistical injury. The study confirms that the compensatingwage differential does exist in the formal private sector in Pakistan. The results of the study shall help the policy makers and other researchers.