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Rising Wage Inequality in India: a Translog Cost Function Analysis


  • Srivastava Archana

    () (Indian Institute of Technology, Kanpur, India)


The paper attempts to investigate the various determinants of rising wage inequality in India since 1980s. A translog cost function along with the share equations is used to evaluate the impact of various factors such as trade, technology, liberalization phase, efficiency (technical, allocative and cost) and inflation on rising wage inequality between the skilled and unskilled labour. Seemingly unrelated regressions (SUR) procedure by Zellner is used for the estimation purpose. Annual Survey of Industries data at the two digit level from the year 1973-74 to 2007-08, has been used for the study. The findings reveal that trade and technology both tend to increase the wage inequality. Further, elasticity results reveal that capital, skilled labour, unskilled labour etc have turned out to be, substitutes since 1989, although few of them were complementary before the liberalisation phase.

Suggested Citation

  • Srivastava Archana, 2011. "Rising Wage Inequality in India: a Translog Cost Function Analysis," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1966-1970, May.
  • Handle: RePEc:ovi:oviste:v:11:y:2011:i:1:p:1966-1970

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    More about this item


    Translog Cost Function; Seemingly Unrelated Regressions; Wage Inequality; Trade; Efficiency;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development


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