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Wage differentials between the public and private sectors in India

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  • Elena Glinskaya

    (The World Bank, Washington, District of Columbia, USA)

  • Michael Lokshin

    (The World Bank, Washington, District of Columbia, USA)

Abstract

This study uses 1993-94 and 1999-2000 rounds of India Employment and Unemployment survey to investigate wage differentials between the public and private sectors. To obtain robust estimates of the wage differential, we apply three econometric techniques each relying on a different set of assumptions about the process of job selection and wage formation. All three methods show that differences in wages between public sector workers and workers in the formal-private and informal-casual sectors are positive and high. On average, the public sector premium ranges between 62 and 102 per cent over the private-formal sector, and between 164 and 259 per cent over the informal-casual sector, depending on the choice of methodology. The wage differentials in India tend to be higher in rural as compared to urban areas, and are higher among women than among men. The wage differential also tends to be higher for low-skilled workers. There is considerable evidence of an increase in the wage differential between 1993-1994 and 1999-2000. Copyright © 2007 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 19 (2007)
Issue (Month): 3 ()
Pages: 333-355

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Handle: RePEc:wly:jintdv:v:19:y:2007:i:3:p:333-355

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Web page: http://www3.interscience.wiley.com/journal/5102/home

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  1. Michael Lechner, 2002. "Program Heterogeneity And Propensity Score Matching: An Application To The Evaluation Of Active Labor Market Policies," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 205-220, May.
  2. Bales, Sarah & Rama, Martin, 2001. "Are public sector workers underpaid? - Appropriate comparators in a developing country," Policy Research Working Paper Series 2747, The World Bank.
  3. Guido W. Imbens, 1999. "The Role of the Propensity Score in Estimating Dose-Response Functions," NBER Technical Working Papers 0237, National Bureau of Economic Research, Inc.
  4. Angus Deaton & Alessandro Tarozzi, 2000. "Prices and poverty in India," Working Papers 213, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  5. François Bourguignon & Martin Fournier & Marc Gurgand, 2002. "Selection Bias Correction Based on the Multinomial Logit Model," Working Papers 2002-04, Centre de Recherche en Economie et Statistique.
  6. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  7. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  8. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2001. "Evaluating the employment impact of a mandatory job search assistance program," IFS Working Papers W01/20, Institute for Fiscal Studies.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Revising the wages of civil servants
    by Ajay Shah in Ajay Shah's blog on 2006-03-09 16:01:00
  2. What does it mean when a million people apply for a thousand jobs?
    by Ajay Shah in Ajay Shah's blog on 2010-03-21 18:38:00
  3. What Does it Mean When a Million People Apply for a Thousand Jobs?
    by Ajay Shah in Citizen Economists on 2010-03-22 16:10:11
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Cited by:
  1. Erik Monsen & Prashanth Mahagaonkar & Christian Dienes, 2012. "Entrepreneurship in India: the question of occupational transition," Small Business Economics, Springer, vol. 39(2), pages 359-382, September.
  2. Nguyen Danh, Hoang Long, 2002. "public-private sector wage differentials for males and females in vietnam," MPRA Paper 6583, University Library of Munich, Germany.
  3. Alejandra Mizala & Pilar Romaguera & Sebastian Gallegos, 2010. "Public-Private Wage Gap In Latin America (1999-2007): A Matching Approach," Documentos de Trabajo 268, Centro de Economía Aplicada, Universidad de Chile.
  4. Abhijit Banerjee & Esther Duflo & Maitreesh Ghatak & Jeanne Lafortune, 2009. "Marry for What: Caste and Mate Selection in Modern India," NBER Working Papers 14958, National Bureau of Economic Research, Inc.
  5. Menon, Nidhiya & Rodgers, Yana van der Meulen, 2009. "International Trade and the Gender Wage Gap: New Evidence from India's Manufacturing Sector," World Development, Elsevier, vol. 37(5), pages 965-981, May.
  6. Shah, Ajay, 2008. "New issues in Indian macro policy," Working Papers 08/51, National Institute of Public Finance and Policy.
  7. Hasan, Rana & Jandoc, Karl Robert L., 2009. "Quality of Jobs in the Philippines: Comparing Self-Employment with Wage Employment," ADB Economics Working Paper Series 148, Asian Development Bank.
  8. Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," PSE Working Papers halshs-00564653, HAL.
  9. Mizala, Alejandra & Romaguera, Pilar & Gallegos, Sebastián, 2011. "Public–private wage gap in Latin America (1992–2007): A matching approach," Labour Economics, Elsevier, vol. 18(S1), pages S115-S131.
  10. Stephen Howes & Rinku Murgai & Marina Wes, 2004. "Expenditure Implications of India's State-level Fiscal Crisis," ASARC Working Papers 2004-15, The Australian National University, Australia South Asia Research Centre.
  11. Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," Working Papers halshs-00564653, HAL.

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