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The Changing Inter-Industry Wage Structure of the Organised Manufacturing Sector in India, 1973-74 to 2003-04

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  • Monojit Chatterji
  • Homagni Choudhury

Abstract

This study examines the inter-industry wage structure of the organised manufacturing sector in India for the period 1973-74 to 2003-04 by estimating the growth of average real wages for production workers by industry. In order to estimate the growth rates, the study adopts a methodological framework that differs from other studies in that the time series properties of the concerned variables are closely considered in order to obtain meaningful estimates of growth that are unbiased and (asymptotically) efficient. Using wage data on 51 manufacturing industries at three digit level of the National Industrial Classification 1998 (India), our estimation procedure obtains estimates of growth of real wages per worker that are deterministic in nature by accounting for any potential structural break(s). Our findings show that the inter-industry wage structure in India has changed a lot in the period 1973-74 to 2003-04 and that it provides some evidence that the inter-industry wage differences have become more pronounced in the post-reforms period. Thus this paper provides new evidence from India on the need to consider the hypothesis that industry affiliation is potentially an important determinant of wages when studying any relationship between reforms and wages.

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Bibliographic Info

Paper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 244.

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Length: 46 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:dun:dpaper:244

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Keywords: Growth Rate; CAGR; AAGR; Unit Roots; Trend Stationary; Structural Breaks; Real Wages; Inter-industry Wage Structure;

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  1. Junsoo Lee & Mark C. Strazicich, 2003. "Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1082-1089, November.
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