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Segmentation theory argues that the labor market is composed of a variety of non-competing segments between which rewards to human capital are determined by institutional structures. This paper presents new evidence on sector-wise earning differential for both male and female samples to assess the implications of segmentation theory.

Primary data is collected through simple random sampling technique with a survey questionnaire from 954 employed individuals of Southern Punjab, the less developed region of Pakistan. OAXACA decomposition technique is adopted to estimate earning differential.

Empirical estimates of OAXACA decomposition reveal that the extent of discrimination between public and private sector is greater in case of females than in male samples. Education and region are crucial factors behind sector-wise earning differential for both male and female samples. Job characteristics are more valued than occupation to explain sector-wise earning differential. Occupation largely contributes to explain public–private sector earning differential in male sample than in female sample. Moreover, job security is highly valued by females than males.

Segmentation of the institutional structure in a developing economy is empirically verified by using primary data due to non-availability of data on some variables from secondary data sources. This study attempts to explore the key factors of public–private sector wage differential for male and female samples separately due to the differences in their preferences for work and earning functions.

The purpose of this paper is to provide new insights about investment-cash flow sensitivities (ICFS) as a representative of financial constraints, by examining panel data consisting of 288 listed firms in Pakistan.

This study uses a panel data methodology and first difference generalized method of moments to control the problems of heterogeneity and endogeneity. By five different criteria, estimations are made for full and pre-classified sub-samples. Sargan test and Arellano-Bond serial correlation statistic are used for identification and validation of instruments and model.

According to the results, the ICFS has increased monotonically with the level of financial constraints. Further, the results depict that ICFS for the constrained group is much higher as compared to the unconstrained group. Overall, the result illustrates positively significant ICFS.

This study confirms signs of imperfections in the capital market, which leads to financial markets inaccessibility preceded by high under-investment costs and low social and economic development. Thus, proper policy designing and instigation are necessary for the subsidies, taxation, and foreign direct investment and later for financial market development and promotion of private corporate investment.

Previous studies have mostly focused on developed countries where large listed companies work in well-developed financial markets and do not face severe financial constraints because of the greater market integration (Bekaert et al., 2011, 2013) and superior investor protection laws (Djankov et al., 2008; La porta et al., 1998). However, this study focuses on listed companies from the emerging Pakistani market, which will bring forth the interesting aspects of ICFS and will enhance the existing literature effectively.