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Accounting for Wage Inequality in India

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Author Info
Puja Vasudeva Dutta () (National Council of Applied Economic Research, New Delhi)

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Abstract

This paper investigates the evolution and structure of wage inequality among adult male workers engaged in regular and casual wage employment in India during a period of radical economic change. The analysis exploits data from nationally representative employment surveys and uses decomposition techniques to examine the role played by educational achievement and industry affiliation. This paper finds that there are striking differences for the two groups of workers. Wage inequality rose between 1983 and 1999 among regular workers but fell among casual workers. While human capital (as embodied in age and education) is one of the major factors explaining both the level of and change in regular wage inequality, geographic location is the key determinant of casual wage inequality. Industry affiliation plays an equally important role for both sets of workers. These are also consistently the most important contributors to changes in inequality though the directional effects differ among the different sets of workers.

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Publisher Info
Paper provided by Poverty Research Unit at Sussex, University of Sussex in its series PRUS Working Papers with number 29.

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Length: 31 pages
Date of creation: Jan 2005
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Handle: RePEc:pru:wpaper:29

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Postal: School of Social Sciences and Cultural Studies, Falmer, Brighton BN1 9SN
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Related research
Keywords: India wage inequality inequality decomposition segmented labour market

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Find related papers by JEL classification:
D33 - Microeconomics - - Distribution - - - Factor Income Distribution
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Newell, Andrew, 2001. "The Distribution of Wages in Transition Countries," IZA Discussion Papers 267, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages F73-F96, 02. [Downloadable!] (restricted)
  3. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August. [Downloadable!] (restricted)
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  4. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, Blackwell Publishing, vol. 46(2), pages 139-59, June.
  5. Whitney Newey, 1999. "Two Step Series Estimation of Sample Selection Models," Working papers 99-04, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Attanasio, Orazio & Goldberg, Pinelopi K. & Pavcnik, Nina, 2004. "Trade reforms and wage inequality in Colombia," Journal of Development Economics, Elsevier, vol. 74(2), pages 331-366, August. [Downloadable!] (restricted)
  7. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September. [Downloadable!] (restricted)
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  9. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September. [Downloadable!] (restricted)
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  10. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
  11. Angus Deaton and Jean Drèze & Jean Drèze, 2002. "Poverty and Inequality in India: A Reexamination," Working papers 107, Centre for Development Economics, Delhi School of Economics. [Downloadable!]
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  12. Ann Harrison & Gordon Hanson, 1999. "Who Gains from Trade Reform? Some Remaining Puzzles," NBER Working Papers 6915, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, Oxford University Press, vol. 11(1), pages 33-57, January.
  14. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April. [Downloadable!] (restricted)
  15. Benabou, R., 1996. "Inequality and Growth," Working Papers 96-22, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
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  16. Puja Vasudeva Dutta, 2004. "Trade Protection and Inter-industry Wages in India," PRUS Working Papers 27, Poverty Research Unit at Sussex, University of Sussex. [Downloadable!]
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  17. Geeta Gandhi Kingdon, 1997. "Does the Labour Market Explain Lower Female Schooling in India?," STICERD - Development Economics Papers 01, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  18. Trost, Robert P & Lee, Lung-Fei, 1984. "Technical Training and Earnings: A Polychotomous Choice Model with Selectivity," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 151-56, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mehtabul Azam, 2007. "India’s Increasing Skill Premium: Role of Demand and Supply," Departmental Working Papers 0710, Southern Methodist University, Department of Economics. [Downloadable!]
  2. Sonja Fagernäs, 2006. "How do family ties, boards and regulation affect pay at the top? Evidence for Indian CEOs," ESRC Centre for Business Research - Working Papers wp335, ESRC Centre for Business Research. [Downloadable!]
  3. Puja Vasudeva Dutta, 2006. "Returns to Education: New Evidence for India, 1983--1999," Education Economics, Taylor and Francis Journals, vol. 14(4), pages 431-451, December. [Downloadable!] (restricted)
  4. Chaudhuri, Shubham & Ravallion, Martin, 2006. "Partially awakened giants : uneven growth in China and India," Policy Research Working Paper Series 4069, The World Bank. [Downloadable!]
  5. Rubiana Chamarbagwala & Gunjan Sharma, 2008. "Industrial Deregulation, Skill Upgrading, and Wage Inequality in India," Caepr Working Papers 2008-002, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
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