Education-Driven Economic Mobility: A Structural Equation Modeling Approach to Assessing Long-Term Socioeconomic Impacts in Pakistan

Abstract

Education plays a crucial role in determining economic mobility, particularly in developing economies like Pakistan, where disparities in educational access and labor market opportunities persist. This study employs a Structural Equation Modeling (SEM) approach to examine the long-term socioeconomic impacts of education on economic mobility while considering key influencing factors such as parental socioeconomic status, social capital, and regional disparities. Using primary survey data, the study analyzes how years of schooling affect income levels, employment status, and overall economic well-being. The results confirm that higher education significantly enhances economic mobility (β = 0.42, p < 0.01), reinforcing the human capital theory, which postulates that investments in education yield substantial economic returns. Additionally, parental education (β = 0.21, p < 0.01) and social capital (β = 0.38, p < 0.01) emerge as critical determinants, highlighting the intergenerational transmission of economic advantage and the role of professional networks in career progression. However, the study also finds that regional disparities negatively impact economic mobility (β = -0.19, p < 0.05), underscoring structural barriers that limit the benefits of education for individuals in underdeveloped areas. These findings align with broader labor market trends in Pakistan, where urban centers provide greater employment opportunities compared to rural regions. Policy recommendations include expanding vocational training programs, reducing regional disparities in educational infrastructure, promoting merit-based hiring practices, and strengthening social capital-building initiatives. By implementing these strategies, Pakistan can enhance the role of education in fostering inclusive economic growth and sustainable development. Future research should explore the long-term intergenerational effects of education and the impact of digital learning on economic mobility to address evolving labor market challenges.

Keywords: Education, Economic Mobility, Human Capital, Structural Equation Modeling, Social Capital, Regional Disparities, Vocational Training, Labor Market, Pakistan, Socioeconomic Development.