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A Distributional Analysis of the Public-Private Wage Differential in India

  • Azam, Mehtabul

    ()

    (Oklahoma State University)

  • Prakash, Nishith

    ()

    (University of Connecticut)

We investigate the public-private wage differential in India using nationally representative micro data. While the existing literature focuses on average wage differential, we study the differences in the wage distributions. The raw wage differential between public and private sector is positive across the entire distribution for both genders irrespective of area of residence. A quantile regression based decomposition analysis reveals that the differences in observed characteristics (covariate effect) account for only a small part of the wage differential at lower quantiles, but a larger part at higher quantiles. At the very top of the distribution, covariate effect account for a majority of the observed wage differential.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5132.

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Length: 23 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5132
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  1. Glinskaya, Elena & Lokshin, Michael, 2005. "Wage differentials between the public and private sector in India," Policy Research Working Paper Series 3574, The World Bank.
  2. James Albrecht & Anders Bjorklund & Susan Vroman, 2003. "Is There a Glass Ceiling in Sweden?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 145-177, January.
  3. Aimee Chin & Nishith Prakash, 2010. "The Redistributive Effects of Political Reservation for Minorities: Evidence from India," CReAM Discussion Paper Series 1003, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
  5. Borjas, George J, 1980. "Wage Determination in the Federal Government: The Role of Constituents and Bureaucrats," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1110-47, December.
  6. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  7. Marianne Bertrand & Rema Hanna & Sendhil Mullainathan, 2008. "Affirmative Action in Education: Evidence From Engineering College Admissions in India," NBER Working Papers 13926, National Bureau of Economic Research, Inc.
  8. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09.
  9. Prakash, Nishith, 2009. "Improving the Labor Market Outcomes of Minorities: The Role of Employment Quota," IZA Discussion Papers 4386, Institute for the Study of Labor (IZA).
  10. Aslam, Monazza & Kingdon, Geeta, 2009. "Public-private sector segmentation in the Pakistani labour market," Journal of Asian Economics, Elsevier, vol. 20(1), pages 34-49, January.
  11. Bender, Keith A, 1998. " The Central Government-Private Sector Wage Differential," Journal of Economic Surveys, Wiley Blackwell, vol. 12(2), pages 177-220, April.
  12. Keith A. Bender, 2003. "Examining Equality between Public- and Private-Sector Wage Distributions," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 62-79, January.
  13. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  14. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
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