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Wage Differential between Informal and Formal Wage Worker in India

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  • Manik Kumar
  • Rahul Ranjan

Abstract

This paper investigates broad empirical picture of wage differential between informal and formal wage worker across different sector, gender, industry, education, social group and state as well as informal and formal sector in India with the 55th (1999- 2000) and 66th round (2009-2010) household survey on employment and unemployment conducted by National Sample Survey Office (NSSO). This study shows informal worker earns approximately two times less then formal worker in both informal as well as formal sector. Wage difference is sharp in case of skilled labour as compared to unskilled and semi-skilled labour. Compound annual growth of wage is very sluggish in all categories of labour. Formal worker earn two to three times more than informal labour in informal as well as in formal sector.

Suggested Citation

  • Manik Kumar & Rahul Ranjan, 2015. "Wage Differential between Informal and Formal Wage Worker in India," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 1(4), pages 9-19, December.
    • Handle: RePEc:khe:scajes:v:1:y:2015:i:4:p:9-19
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    References listed on IDEAS

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    1. Vinoj Abraham, 2008. "Employment growth in rural India: Distress driven?," Centre for Development Studies, Trivendrum Working Papers 404, Centre for Development Studies, Trivendrum, India.
    2. Gary S. Fields, 2004. "Dualism In The Labor Market: A Perspective On The Lewis Model After Half A Century," Manchester School, University of Manchester, vol. 72(6), pages 724-735, December.
    3. Ms. Prachi Mishra & Mr. Utsav Kumar, 2005. "Trade Liberalization and Wage Inequality: Evidence From India," IMF Working Papers 2005/020, International Monetary Fund.
    4. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    Cited by:

    1. Subhasankar Chattopadhyay & Rima Mondal, 2017. "Characterisation of Economic Growth in Developing Economies with Informal Sector," Economic Papers, The Economic Society of Australia, vol. 36(1), pages 86-101, March.

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    More about this item

    Keywords

    Informal Worker; Formal Worker; Wage Differential;
    All these keywords.

    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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