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Policy interest in education is linked to its potential to raise earnings and reduce poverty. This paper investigates the education-earnings relationship in Pakistan, drawing on the Pakistan integrated household surveys of 1998-99 and 2001-02. The analysis has three main goals: to examine the labor market returns to education among waged, self-employed, and agricultural workers; to examine the labor market returns to literacy and numeracy skills for these categories of workers; and to analyze the pattern of returns to education along the earnings distribution. Because data are available from two points in time, the paper also investigates how these returns have changed between the periods 1998-99 and 2001-02. While wage employment has been the object of most existing analyses, it is typically a small, and often shrinking, part of the labor market in developing countries. The labor market benefits of education accrue both from the fact that education promotes a person's entry into lucrative occupations and, conditional on occupation, raises earnings. The objective is to ask whether education raises earnings within any given occupation and whether it also raises earnings indirectly by facilitating entry into well-paying occupations, such as waged work. This exercise will be accomplished by estimating multinomial log it models of occupational attainment and earnings functions for the different occupation groups. The rate of return to education is estimated by occupation and for different levels of education, the latter in order to see the shape of the education-earnings relationship. In estimating the returns to education, the paper also attempts to correct for selectivity and endogeneity biases.