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Changes in Wage Structure in Urban India, 1983-2004: A Quantile Regression Decomposition

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  • Mehtabul Azam

    ()
    (Southern Methodist University)

Abstract

This paper examines changes in the wage structure in urban India during the past two decades (1983-2004) across the entire wage distribution using the Machado and Mata (2005) decomposition approach. Real wages increased throughout the wage distribution during 1983-1993; however, it increased only in the upper half of the wage distribution during 1993-2004. Quantile regression analysis reveals that the effects of many covariates are not constant across the wage distribution. Moreover, increases in returns to covariates across the entire distribution are the driving forces behind the wage changes in both decades. Change in composition of the work force contributed positively to wage growth during 1983-1993, but negatively during 1993-2004. Finally, while workers with all education levels experienced an increase in returns of roughly the same magnitude during 1983-1993, the increase in returns is much higher for workers with tertiary and secondary education during 1993-2004. The inequality increasing effects of tertiary education suggests that wage inequality in urban India may increase further in the near future as more workers get tertiary education.

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Bibliographic Info

Paper provided by Southern Methodist University, Department of Economics in its series Departmental Working Papers with number 0807.

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Date of creation: Aug 2008
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Handle: RePEc:smu:ecowpa:0807

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Postal: Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496
Phone: 214-768-2715
Fax: 214-768-1821
Web page: http://www.smu.edu/economics

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Keywords: earning functions; India; quantile regression decomposition; wage.;

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Cited by:
  1. Chari, A.V. & Maertens, Annemie, 2014. "Gender, productive ability and the perceived returns to education: Evidence from rural India," Economics Letters, Elsevier, vol. 122(2), pages 253-257.
  2. Azam, Mehtabul, 2009. "A Distributional Analysis of Social Group Inequality in Rural India," IZA Discussion Papers 3973, Institute for the Study of Labor (IZA).
  3. Oliveira, Pedro Rodrigues de & Belluzzo, Walter & Pazello, Elaine Toldo, 2013. "The public–private test score gap in Brazil," Economics of Education Review, Elsevier, vol. 35(C), pages 120-133.
  4. Tushar Agrawal, 2011. "Returns to education in India: Some recent evidence," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-017, Indira Gandhi Institute of Development Research, Mumbai, India.
  5. Kamal Vatta & Takahiro Sato, 2012. "Indian Labour Markets and Returns to Education, 1983 to 2009-10," Discussion Paper Series DP2012-33, Research Institute for Economics & Business Administration, Kobe University.
  6. Scott Fulford, 2012. "Returns to education in India," Boston College Working Papers in Economics 819, Boston College Department of Economics.
  7. Azam, Mehtabul Azam & Blom, Andreas, 2008. "Progress in Participation in Tertiary Education in India from 1983 to 2004," Policy Research Working Paper Series 4793, The World Bank.

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