IDEAS home Printed from https://ideas.repec.org/a/spr/ijlaec/v60y2017i3d10.1007_s41027-018-0107-6.html
   My bibliography  Save this article

Contractualization and Wage Differences: Evidence from Organized Manufacturing Industries in India

Author

Listed:
  • Hansa Jain

    (Sardar Patel Institute of Economic and Social Research)

Abstract

The post-reform scenario of inflow of capital and technology associated with labour market flexibility has changed the employment portfolio in Indian manufacturing industries. The shift of workers from directly employed status to contractual status has resulted in wage differences in different ways. This study is an attempt to determine inter-labour, inter-temporal and inter-state wage differences. The study also finds the impact of capital–labour ratio and labour productivity on wage disparity and the possibility of wage convergence (if any). The study is based on secondary data. Using simple statistical techniques and applying ordinary least square method, the study finds a difference in average daily earnings of directly employed workers and contract workers. The difference is found to be high from the average daily earnings of all employees. This is on account of increasing importance of non-production workers in relation to production workers in the manufacturing sector. Consequently, the share of wages in total emoluments is decreasing. The study suggests increasing labour productivity via appropriate education and skill in order to deal with wage disparity and drive the wages towards convergence in the long run.

Suggested Citation

  • Hansa Jain, 2017. "Contractualization and Wage Differences: Evidence from Organized Manufacturing Industries in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 60(3), pages 461-479, September.
    • Handle: RePEc:spr:ijlaec:v:60:y:2017:i:3:d:10.1007_s41027-018-0107-6
    DOI: 10.1007/s41027-018-0107-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41027-018-0107-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41027-018-0107-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Amit K Bhandari & Almas Heshmati, 2008. "Wage Inequality and Job Insecurity Among Permanent and Contract Workers in India: Evidence from Organized Manufacturing Industries," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 80-111, January.
    2. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    3. Dibyendu Maiti & Arup Mitra, 2010. "Skills, Informality, and Development," Labor Economics Working Papers 23037, East Asian Bureau of Economic Research.
    4. Poonam Gupta & Rana Hasan & Utsav Kumar, "undated". "What Constrains Indian Manufacturing?," Indian Council for Research on International Economic Relations, New Delhi Working Papers 211, Indian Council for Research on International Economic Relations, New Delhi, India.
    5. James Heckman, 2011. "Policies to foster human capital," Voprosy obrazovaniya / Educational Studies Moscow, National Research University Higher School of Economics, issue 3, pages 73-137.
    6. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 91-134.
    7. repec:ilo:ilowps:483335 is not listed on IDEAS
    8. K.J. Joseph & Vinoj Abraham & Uma Sankaran, 2016. "Impact of Trade Liberalisation on Employment: The Experience of India’s Manufacturing Industries," Working Papers id:10868, eSocialSciences.
    9. James Heckman & Justin L. Tobias & Edward Vytlacil, 2003. "Simple Estimators for Treatment Parameters in a Latent-Variable Framework," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 748-755, August.
    10. Basu, Deepankar & Das, Debarshi, 2015. "Profitability in India’s Organized Manufacturing Sector: The Role of Technology, Distribution, and Demand," UMASS Amherst Economics Working Papers 2015-04, University of Massachusetts Amherst, Department of Economics.
    11. Bishwanath Goldar & Suresh Chand Aggarwal, 2012. "Informalization Of Industrial Labor In India: Effects Of Labor Market Rigidities And Import Competition," The Developing Economies, Institute of Developing Economies, vol. 50(2), pages 141-169, June.
    12. Papola, T. S.,, 2013. "Role of labour regulation and reforms in India : country case study on labour market segregation," ILO Working Papers 994833353402676, International Labour Organization.
    13. Saha, Bibhas & Sen, Kunal & Maiti, Dibyendu, 2013. "Trade openness, labour institutions and flexibilisation: Theory and evidence from India," Labour Economics, Elsevier, vol. 24(C), pages 180-195.
    14. Utsav Kumar & Prachi Mishra, 2008. "Trade Liberalization and Wage Inequality: Evidence from India," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 291-311, May.
    15. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nidhi Sharma, 2021. "Interstate Wage Differentials in Organized Manufacturing Industries," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(4), pages 961-979, December.
    2. Sanjeev Kumar & Falguni Pattanaik, 2020. "Regional Disparities in Employment Intensity of Indian Industries: A State-level Analysis," Emerging Economy Studies, International Management Institute, vol. 6(1), pages 23-38, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simontini Das, 2018. "Does Casualization Increase the Job Opportunity to the Workers or Impoverish Them? An Evidence from Indian-Organized Manufacturing Sector," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 86-107, March.
    2. Bishwanath Goldar, 2010. "Informalization of Industrial Labour in India: Are labour market rigidities and growing import competition to blame?," Working Papers id:3125, eSocialSciences.
    3. Irfan Ahmad SOFI & Mohd Hussain KUNROO, 2018. "Demand shocks and employment adjustments: Does employment protection legislation create rigidity?," International Labour Review, International Labour Organization, vol. 157(3), pages 461-480, September.
    4. Furuta, Manabu, 2016. "Trade Liberalization and Wage Inequality in the Indian Manufacturing Sector," MPRA Paper 73709, University Library of Munich, Germany.
    5. Aditya Bhattacharjea, 2019. "Labour Market Flexibility in Indian Industry A Critical Survey of the Literature," Working papers 296, Centre for Development Economics, Delhi School of Economics.
    6. Swapan Chakraborty, 2021. "Labour Market Regulation and Manufacturing Employment: A Study of Organized Manufacturing Sector Across Indian States," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(1), pages 1-22, March.
    7. Prateek Kukreja & Seema Bathla, 2018. "Labour Regulations and Informalisation in India’s Organised Manufacturing: A Case of Textile and Clothing," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(3), pages 473-492, September.
    8. Basu, Arnab K. & Chau, Nancy H. & Soundararajan, Vidhya, 2021. "Contract employment as a worker discipline device," Journal of Development Economics, Elsevier, vol. 149(C).
    9. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2014. "Does local financial development matter for firm lifecycle in India ?," Policy Research Working Paper Series 7008, The World Bank.
    10. Ural Marchand, Beyza, 2012. "Tariff pass-through and the distributional effects of trade liberalization," Journal of Development Economics, Elsevier, vol. 99(2), pages 265-281.
    11. Carneiro, Pedro & Heckman, James J & Masterov, Dimitriy V, 2005. "Labor Market Discrimination and Racial Differences in Premarket Factors," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 1-39, April.
    12. Viollaz, Mariana, 2016. "Enforcement of Labor Market Regulations: Heterogeneous Compliance and Adjustment across Gender," MPRA Paper 72000, University Library of Munich, Germany.
    13. Nihar Shembavnekar, 2015. "Tariff Liberalisation, Labour Market Flexibility and Employment: Evidence from India," Working Paper Series 8115, Department of Economics, University of Sussex Business School.
    14. Almeida, Rita & Carneiro, Pedro, 2006. "Enforcement of Regulation, Informal Labour, Firm Size and Firm Performance," CEPR Discussion Papers 5976, C.E.P.R. Discussion Papers.
    15. Gupta, Poonam & Hasan, Rana & Kumar, Utsav, 2009. "Big Reforms but Small Payoffs: Explaining the Weak Record of Growth and Employment in Indian Manufacturing," MPRA Paper 13496, University Library of Munich, Germany.
    16. Almeida, Rita K. & Carneiro, Pedro, 2005. "Enforcement of Regulation, Informal Labor and Firm Performance," IZA Discussion Papers 1759, Institute of Labor Economics (IZA).
    17. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2016. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," Economic Journal, Royal Economic Society, vol. 126(591), pages 317-357, March.
    18. Psillaki, Maria & Mamatzakis, Emmanuel, 2017. "What drives bank performance in transitions economies? The impact of reforms and regulations," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 578-594.
    19. Sonja Fagernäs, 2010. "Labor Law, Judicial Efficiency, and Informal Employment in India," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 7(2), pages 282-321, June.
    20. Almeida, Rita & Carneiro, Pedro, 2009. "Enforcement of labor regulation and firm size," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 28-46, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:ijlaec:v:60:y:2017:i:3:d:10.1007_s41027-018-0107-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.