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Wage differentials between the public and private sector in India

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  • Glinskaya, Elena
  • Lokshin, Michael

Abstract

The authors use 1993-94 and 1999-2000 India Employment and Unemployment surveys to investigate wage differentials between the public and private sectors as well as workers'decisions to join a particular sector. To obtain robust estimates of the wage differential, they apply three econometric techniques each relying on a different set of assumptions about the process of job selection. 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. Estimates show that, on average, the public sector premium ranges between 62 percent and 102 percent over the private-formal sector, and between 164 percent and 259 percent over the informal-casual sector, depending on the choice of methodology. The authors'review of wage differentials (estimated using similar methodologies) across the world shows that India has one of the largest differentials between wages of public workers and workers in the formal private sector. The wage differentials in India tend to be higher in rural as compared with 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 1993-94 and 1999-2000.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3574.

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Date of creation: 01 Apr 2005
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Handle: RePEc:wbk:wbrwps:3574

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Keywords: Environmental Economics&Policies; PovertyAssessment; Banks&Banking Reform; Health Monitoring&Evaluation; Work&Working Conditions;

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  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
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Citations

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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. 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.
  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. Banerjee, Abhijit & Duflo, Esther & Ghatak, Maitreesh & Lafortune, Jeanne, 2009. "Marry for What? Caste and Mate Selection in Modern India," CEPR Discussion Papers 7300, C.E.P.R. Discussion Papers.
  4. Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," Working Papers halshs-00564653, HAL.
  5. 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.
  6. Erik Monsen & Prashanth Mahagaonkar & Christian Dienes, 2010. "Entrepreneurship in India - The Question of Occupational Transition," Schumpeter Discussion Papers sdp10007, Universitätsbibliothek Wuppertal, University Library.
  7. 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.
  8. Ajay Shah, 2008. "New issues in Indian macro policy," Working Papers id:1478, eSocialSciences.
  9. 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.
  10. 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.
  11. Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," PSE Working Papers halshs-00564653, HAL.

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