The dissertation is aimed to analyze the role of education in Pakistan’s economy. It is composed of three essays. The first essay is based on microeconometric analysis and explores the role of education in the life satisfaction of individuals in Pakistan. The second essay analyzes the impact of education on agriculture, industrial and services sector separately as well as on the overall economy. The third essay is about the comparison of Pakistan economy’s educational statistics with the 10 selected better-performing countries. The essay is aimed to find the gap between the existing and required levels of educational requirements based on the comparison with high performing countries. This essay is also dedicated to define the roadmap for the next two decades for the educational sector of Pakistan in terms of enrollments, number of teachers and government expenditure composition on different levels of education. The first essay is ‘Education and life satisfaction: A Marginal Mediation Analysis’. The purpose of the analysis is to find the direct and indirect impact of education on life satisfaction of individuals in Pakistan. Six mediators that are health, employment status, marital status, number of children, the scale of income and freedom of choice are used in the study. Multiple Mediation Model suggested by Powdthavee et al. (2015) is used. The marginal mediation technique by Barrett (2018) is used for estimation. It is specially designed to deal with the interpretability issues in mediation analysis due to the inclusion of binary mediators in the model. The differences based on gender, marital status and the scale of income in the impact of education on life satisfaction are also analyzed. The data from Wave 6 (2010-2014) of the World Values Survey is used. The analysis identified and tested the direct and indirect effects of education on the life satisfaction of individuals in Pakistan for the first time. It helped in identifying the channels that are operative between education and life satisfaction and ones that are broken. The analysis enabled us to know, how outcomes of education affect life satisfaction in a developing country and how these are different in their behaviour in comparison with a developed country observed in the study of Powdthavee et al. (2015). The study also investigates whether education is contributing factor to life satisfaction for all social classes; poor, middle class and higher class or it is only important in the life of poor in Pakistan. Furthermore, the study includes freedom of choice and control over life as a mediating factor in education and life satisfaction model for the first time. The results show that education plays a significant role in affecting the life satisfaction of individuals in Pakistan. The results of analyzing the indirect effect in the full sample show that health, freedom and scale of income are the significant mediators through which education is positively effecting the life satisfaction. The direct effect is also found positive and significant. The channel of employment status is found insignificant between education and life satisfaction in the full sample. The deeper look in the matter shows that the path from education to employment status is significant and positive. But the path from employment status to life satisfaction is broken. The employment status is found insignificant mediator in all other sub-samples based on gender, marital status and scale of income. The analysis is also performed for men and women separately to identify the possible differences. Different paths are found operative. For men, the channels of health, scale of income and marital status while for women channels of health and freedom of choice are found to be functional. The direct effects of education are also statistically significant and positive for both men and women. It is observed that for women all the paths from education to mediators are significant and operative but most of the paths from these mediators to life satisfaction are found insignificant. As a result, only the channels of health and freedom of choice are found significant for them. The broken paths must be mended to fully reap the benefits of education. For single persons, freedom of choice and scale of income while for married person health, freedom of choice and scale of income are significant mediators. For married persons, the total indirect effect is higher than single persons. The direct path is significant and has a positive coefficient value for married persons while for single persons it is found insignificant. The analysis of the impact of education on life satisfaction based on the scale of income illustrates that as compared to rich and poor more channels are effective for the middle class. It is found that all indirect effects, as well as a direct effect, are insignificant in case of the rich class, that means the role of education in defining and affecting the life satisfaction of rich is not supported by the data and is found insignificant. On the other hand, for the middle class, all of the indirect effects are significant except employment status. It indicates that the level of education is playing a crucial role in improving life satisfaction of persons belonging to the middle class. The direct path between education and life satisfaction for the middle class is also effective. For poor class, although only health and marital status are significant mediating effects, the coefficient of direct effect is much higher as compared to the direct path of the middle class. It means that although most of the indirect effects are insignificant for poor still education can affect the life satisfaction of the poor through its direct effect. It proclaims the policy of increased level of education for the poor and middle class to increase the level of life satisfaction in the country. Furthermore, the health channel is found significant in most of the models, it entails that the good of education is effectively translating to health and then to the life satisfaction of individuals. So the policy of increased education will also lead to increased health in the country. Although, the current study is first in its nature for Pakistan and identified the broken links between education and life satisfaction the research gap remains to find the reasons for broken paths. The second essay is particularly aimed to analyze the impact of different levels of education (i.e. Primary, Secondary and Tertiary) of employed persons on level and growth of national output in Pakistan. Moreover, it is an attempt to find the possible differences in the impact of education in different sectors of the economy i.e. Agriculture, Industry and Services Sector. From the review of studies with reference to Pakistan, it is clear that while attempts have been made to analyze the impact of different levels of education on economic growth e.g Jalil & Idrees (2013), still there is a gap in the literature to find its effect on the growth of agriculture, industry and services sector separately. Another distinct feature of this study is the use of output per employed person as a dependent variable, as most of the growth models when solved have dependent variable as Y/L denoted by y. Although per capita output is the most widely proxy used for Y/L, it is more appropriate to measure it as output per worker or employee, if there are no data issues. Benhabib & Spiegel (1994), Pritchett (1997), Hall & Jones(1999), Klenow-Rodriquez(1997), de la Fuente & Domenech(2000) and Barro & Lee(1994) used output per worker as a dependent variable. This study is distinct in considering the education of employed persons instead of overall enrollment rates. If the dependent variable is output per worker then it is more appropriate to analyze the educational level of those who are employed and participating in the production of GDP rather than to consider the education of all the people living in the economy. Hence although like all the previous studies this essay aims to find the impact of education on overall economic growth it is distinct in using different variables for the analysis. Moreover, it is a first attempt in finding the impact of education for different major sectors of the economy. This study is based on the time series analysis over the period of 1985-2018. The method of analysis used is the autoregressive distributed lag model (ARDL). The analysis of the impact of different levels of education of employed persons shows that each level of education whether its primary, secondary or tertiary have a positive effect on the output per employed person both in the short-run as well as in the long-run. It is true for the overall economy, industrial and services sector but the agriculture sector gives somewhat different results. In the agriculture sector, it is found that each level of education is negatively associated with the output per employed person. The deeper analysis showed us that the greater negative effect of employment evades the positive effect of education in the agriculture sector. However, when the effect of education is considered on output, controlling for the effect of employment in the model, the coefficients turned to be positive. The comparison of different sectors for each level of education shows that primary education contributes more to the industrial sector. While the contribution of the secondary and tertiary level of education is highest in the case of the services sector. It implies that primary education is best utilized in the industrial sector as compared to other sectors. While secondary and tertiary education is more efficiently used in the services sector as compared to the industrial and agriculture sector. It is true both for short-run and the long-run. The third essay is “Forecasting educational requirements for the economy of Pakistan: A Normed Planning Approach”. Pakistan lies in the list of medium human development countries with an HDI rank of 150 in the list of 189 countries in the year 2017 (Human Development Report, 2018). Pakistan’s HDI value for the year 2017 is 0.562 that lies below the average value of 0.638 for the South Asia region (Human Development Indices and Indicators: 2018 Statistical Update). The education system in Pakistan lacks uniformity, accessibility and quality. The current study is aimed to compare some of basic and important educational statistics of Pakistan with a group of 10 better performing countries and then to define a road map for the educational sector in Pakistan for the next two decades. The projections for the following variables are made for each level of education i.e. primary, secondary and tertiary level of education. 1. The required levels of Gross enrollment ratios and the number of enrollments. 2. The required levels of student-teacher ratios and the number of teachers. 3. The required composition of government expenditure among different levels of education. 4. Comparison of actual and required levels of all above-mentioned variables in the current time-period 2017. The integration of country by country planning and cross country comparisons is done by Cohen (2015) to forecast the educational requirements. We have followed the same approach to define a road map for the educational sector in Pakistan. Based on the panel data of 10 selected countries, estimations are made for finding the relationship between representative statistics of the education sector and GDP per capita of these countries. Then these estimated regressions are solved by inculcating the GDP of Pakistan in current as well as estimated values for future years to get the required level of educational statistics for the economy of Pakistan. The gap between existing and required levels are also reported. Hence, the third essay contributes to the literature by comparing the existing situation of Pakistan’s educational sector with 10 selected better-performing countries by means of some basic statistics of the education sector. It identifies the gap between the existing and required level of educational statistics to perform better in terms of educational statistics. The following conclusions are drawn on the analysis performed in the third essay. Gross enrollment ratios in Pakistan is below the required level for all levels of education i.e. primary, secondary and tertiary level of education. It is found that the numbers of enrollments are far below the required level of enrollments at each level of education. Wide differences exist between actual and required student-teacher ratios in primary and tertiary level of education. The actual value of the student-teacher ratio is closer for the secondary level of education, however, this is at the cost of low enrollments at the secondary level. Huge differences exist between the actual and required number of teachers in the system of each level of education. Analysis of the distribution of the government’s recurrent expenditure on different levels of education shows that Pakistan is spending more than the required proportion of its spending on education to the primary and secondary level of education. It results in spending less than the required proportion, to tertiary education. It is also deduced from the analysis that the proportion of capital expenditure in overall government expenditure on education is less than required. Supervisor:- Dr. Hafsa Hina Co-Supervisor:-Prof. Dr. Abdul Qayyum