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Sectoral Wage Gaps and Gender in Rural India


  • Merfeld, Joshua D.

    (KDI School of Public Policy and Management)


Using detailed monthly panel data from rural India, this paper analyzes sectoral wage gaps for men and women. I document three important findings. First, there is clear evidence of sorting into sectors, with very large differences in worker human capital across the farm and non-farm sectors and much higher wages in the latter. Second, while these wage gaps are substantial in the cross-section, the wage gap within individuals is decidedly smaller, consistent with worker sorting. Third, the wage gap for women is much larger than it is for men, with the latter exhibiting almost no within-individual gap in wages across sectors. Women work fewer hours and are less likely to work outside of their own village in the non-farm sector, yet the wage gap is driven by higher-caste and married women. I find no evidence of non-pecuniary benefits of agricultural employment relative to non-farm employment being responsible for this gap. These results are consistent with a lack of local non-farm employment opportunities interacting with barriers to labor mobility for women but not men.

Suggested Citation

  • Merfeld, Joshua D., 2021. "Sectoral Wage Gaps and Gender in Rural India," IZA Discussion Papers 14391, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp14391

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    References listed on IDEAS

    1. Kanika Mahajan & Bharat Ramaswami, 2017. "Caste, Female Labor Supply, and the Gender Wage Gap in India: Boserup Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 65(2), pages 339-378.
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    5. Marianne Bertrand & Emir Kamenica & Jessica Pan, 2015. "Gender Identity and Relative Income within Households," The Quarterly Journal of Economics, Oxford University Press, vol. 130(2), pages 571-614.
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    7. Roberto Alvarez & Miguel A. Gonzalez & Jaime Ruiz-Tagle, 2020. "Differences in Immigrants Wage Gap: Evidence from Chile," Working Papers wp506, University of Chile, Department of Economics.
    8. Fumio Hayashi & Edward C. Prescott, 2008. "The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 573-632, August.
    9. Jorge A. Alvarez, 2020. "The Agricultural Wage Gap: Evidence from Brazilian Micro-data," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(1), pages 153-173, January.
    10. Merfeld, Joshua D., 2020. "Smallholders, Market Failures, and Agricultural Production: Evidence from India," IZA Discussion Papers 13682, Institute of Labor Economics (IZA).
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    13. Berthold Herrendorf & Todd Schoellman, 2018. "Wages, Human Capital, and Barriers to Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 1-23, April.
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    More about this item


    agriculture; gender; labor; non-farm; wages;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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