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Public and Private Sector Jobs, Unreported Income and Consumption Gap in India: Evidence from Micro-Data

  • Kar, Saibal

    ()

    (Centre for Studies in Social Sciences, Calcutta)

  • Roy, Poulomi

    ()

    (Jadavpur University)

  • Saha, Sarani

    ()

    (Indian Institute of Technology Kanpur)

This paper tries to document the presence of unreported income among public sector employees in India. We investigate empirically the wage gap as well as consumption expenditure parity between public and private sector workers. It tests the hypothesis that despite a lower level of public sector income in some of the quantiles, if the level of durable goods consumption between the private and the public sector employees are similar, then it might be indicative of the presence of unreported income among the public sector workers. The 2004-05 survey of income and consumption by workers in both private and public sectors (NSSO) supports presence of unaccounted for income among public sector employees at the uppermost quantile. The empirical part is followed by a generalized theoretical formulation that comes up with a measure of the equilibrium level of the unreported income earned by the public sector employees.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6404.

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Length: 33 pages
Date of creation: Mar 2012
Date of revision:
Publication status: published in: North American Journal of Economics and Finance, 2014, 29, 285-300
Handle: RePEc:iza:izadps:dp6404
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