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Wages and Firm Ownership: A Study of the Manufacturing Sector of India

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  • Santosh Kumar Sahu
  • Ankita Goel

Abstract

From an ownership viewpoint, we analyse the determinants of significant wage differences for India’s manufacturing sector. We use data from the Centre for Monitoring Indian Economy’s Prowess database from 2000–2015. Using fixed-effects and Blinder–Oaxaca decomposition method, we confirm that foreign firms pay higher wages and salaries than domestic firms. Most importantly, productivity, participation in the export market, firm size, firm age and profit margin explain the inter-firm and intra-firm differences in labour intensity for the manufacturing firms in the Indian economy. The wage gap seems higher for intra-firm than the inter-firm, indicating that demand for labour is higher within the sector. JEL Classifications: E24, G32, L6, C13

Suggested Citation

  • Santosh Kumar Sahu & Ankita Goel, 2023. "Wages and Firm Ownership: A Study of the Manufacturing Sector of India," Studies in Microeconomics, , vol. 11(2), pages 157-183, August.
    • Handle: RePEc:sae:miceco:v:11:y:2023:i:2:p:157-183
    DOI: 10.1177/23210222211051453
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    References listed on IDEAS

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    More about this item

    Keywords

    Foreign and domestic firms; wage differentials; manufacturing; India;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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