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Wage inequality in Indian manufacturing: Is it trade, technology or labour regulations?

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  • K.V. Ramaswamy

    () (Indira Gandhi Institute of Development Research)

Abstract

This paper investigates the question of wage inequality in Indian manufacturing in the years of trade and investment liberalization. The objective is to test the hypothesis of skill biased technological change (SBTC) due to capital-skill complementarity and the impact of labour regulations on wage inequality between skilled and unskilled labour. The skill-wage bill share equation is estimated for a panel of 46 three-digit industries spanning the period 1981-2004 followed by 113 four-digit industries panel covering the period 1993 to 2004.The econometric results suggest the positive contribution of change in output (scale effect), capital-output ratio and contract-worker intensity to wage inequality in Indian manufacturing.

Suggested Citation

  • K.V. Ramaswamy, 2008. "Wage inequality in Indian manufacturing: Is it trade, technology or labour regulations?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2008-021, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2008-021
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    References listed on IDEAS

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    1. Hippu Salk Kristle Nathan & Srijit Mishra & B. Sudhakara Reddy, 2008. "An Alternative Approach to Measure HDI," Microeconomics Working Papers 22403, East Asian Bureau of Economic Research.
    2. Subramanian, S., 2004. "A Re-scaled Version of the Foster-Greer-Thorbecke Poverty Indices based on an Association with the Minkowski Distance Function," WIDER Working Paper Series 010, World Institute for Development Economic Research (UNU-WIDER).
    3. Srijit Mishra, 2005. "Secluded and Proximate Illiteracy: Comparing Situations," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, pages 231-240.
    4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
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    Cited by:

    1. repec:oup:indcch:v:26:y:2017:i:4:p:555-570. is not listed on IDEAS
    2. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, pages 1152-1199.
    3. Ranis, Gustav, 2012. "Labor Surplus Revisited," Working Papers 107, Yale University, Department of Economics.
    4. Adriana Peluffo, 2015. "Foreign Direct Investment, Productivity, Demand for Skilled Labour and Wage Inequality: An Analysis of Uruguay," The World Economy, Wiley Blackwell, pages 962-983.
    5. Goldar, Bishwanath. & Sadhukhan, Amit., 2015. "Employment and wages in Indian manufacturing : post-reform performance," ILO Working Papers 994881323402676, International Labour Organization.
    6. Chatterji, Monojit & Choudhury, Homagni, 2010. "The Changing Inter-Industry Wage Structure of the Organised Manufacturing Sector in India, 1973-74 to 2003-04," SIRE Discussion Papers 2010-89, Scottish Institute for Research in Economics (SIRE).
    7. repec:ilo:ilowps:488132 is not listed on IDEAS
    8. Wan, Guanghua & Lu, Ming & Chen, Zhao, 2004. "Globalization and Regional Income Inequality: Evidence from within China," WIDER Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    9. Gustav Ranis, 2012. "Labor Surplus Revisited," Working Papers 1016, Economic Growth Center, Yale University.

    More about this item

    Keywords

    wages inequality; skill technological change labour manufacturing;

    JEL classification:

    • 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
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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