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Technological Change, Skill Supply and Wage Distribution: Comparison of High-Technology and Low-Technology Industries in India

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  • Hansa Jain

    (Sardar Patel Institute of Economic and Social Research)

Abstract

The technological inflows on the one hand and the increase in skill supply on the other have influenced not only the production structure of Indian manufacturing industries, but also the distribution of wages among the skilled and unskilled workers. The present study examines the wage disparity scenario in high-technology and low-technology industries in India. With the help of industry-level panel data from 2000–2001 to 2015–2016, the study finds the important role of skill intensity in determining wage disparity between and within the groups of skilled and unskilled workers. Skill has greater concentration in high-technology industries. Wage disparity between the skilled and unskilled workers and also within the skilled workers is high in high-technology industries as compared to low-technology industries. Skill intensity increases wage disparity in the beginning, but later on due to trickle-down effect, the trend is reversed. The study suggests that enhancement of skills through expansion of higher education and training will improve both the observed and unobserved abilities. This will increase productivity on the one hand and decrease wage disparity on the other. There is also a concern for the promotion of research and development activities to develop skill further.

Suggested Citation

  • Hansa Jain, 2018. "Technological Change, Skill Supply and Wage Distribution: Comparison of High-Technology and Low-Technology Industries in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 299-320, June.
    • Handle: RePEc:spr:ijlaec:v:61:y:2018:i:2:d:10.1007_s41027-018-0130-7
    DOI: 10.1007/s41027-018-0130-7
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    References listed on IDEAS

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