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Wage Rate: Is this Return to Education or Return to Physical Capability? Evidence from Rural India

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  • Namrata Singha Roy

    (Christ University)

Abstract

This paper estimates the wage function for daily labor market participants in Semi-Arid Tropics of rural India within a traditional agrarian framework. Village level data on 18 villages for 2009–2010 and 2012–2013 have been used for this study. Three-years balanced panel estimation has also been conducted to test the time invariance of the findings from the cross-sectional study. A modified Mincerian earning equation is estimated for different types of workers—regressing upon a set of human capital measures, socioeconomic factors and, demand influences after correcting for potential sample selection bias. The study finds differential impacts of education and physical ability to determine wages for male and female workers. It reveals the greater importance of education in explaining wages of male laborers while for females, nutritional status playing a significant role than education in wage determination process. Among the other factors, drought works as a major exogenous shock and hence impacts wages badly. Working in the non-farm sector has a significant impact on wages. Also, the wage–participation relationship has found more operative in the lower section of the society.

Suggested Citation

  • Namrata Singha Roy, 2020. "Wage Rate: Is this Return to Education or Return to Physical Capability? Evidence from Rural India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 99-117, March.
  • Handle: RePEc:spr:ijlaec:v:63:y:2020:i:1:d:10.1007_s41027-020-00205-w
    DOI: 10.1007/s41027-020-00205-w
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    1. K M, Siby, 2021. "Wage Earnings: Does Experience outweigh Education? Evidence from Ernakulam district of Kerala," MPRA Paper 107552, University Library of Munich, Germany.
    2. A. Amarender Reddy & Surabhi Mittal & Namrata Singha Roy & Sanghamitra Kanjilal-Bhaduri, 2021. "Time Allocation between Paid and Unpaid Work among Men and Women: An Empirical Study of Indian Villages," Sustainability, MDPI, vol. 13(5), pages 1-17, March.

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