Skill sorting, inter-industry skill wage premium, and production chains: evidence from India 1999-2000
This paper proposes a mechanism that links industryâ€™s technological characteristics (i.e. quality of non-labor inputs, which is proxied by the length of industry production chains), industry-specific skill wage premium, and skill sorting across industries. It is hypothesized that high-skilled workers are sorted into industries where they can receive a higher skill wage premium, by working with better quality non-labor input. The quality of non-labor inputs is assumed to be worse in industries with longer production chains due to the increased involvement of low-skilled labor and poor infrastructure over the sequential production. By examining Indian wage and employment data for 1999-2000, empirical evidence to support this mechanism can be obtained: First, the skill wage premium is lower [higher] in industries with longer [shorter] production chains. Second, the skill wage premium is lower [higher] in industries with a higher [lower] proportion of low-skilled workers producing inputs outside their own industry. Third, the proportion of high-skilled workers is larger in industries with shorter production chains and lower ratio of low-skilled labor involved, i.e., a skill sorting trend can be observed.
|Date of creation:||Feb 2011|
|Date of revision:|
|Publication status:||Published in IDE Discussion Paper. No. 278. 2011. 2|
|Contact details of provider:|| Postal: 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545|
Web page: http://www.ide.go.jp/
More information through EDIRC
|Order Information:|| Postal: Publication Office, IDE 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545 JAPAN|
Web: http://www.ide.go.jp/English/Publish/Order Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lundin, Nan Nan & Yun, Lihong, 2004.
"International Trade and Inter-Industry Wage Structure in Swedish Manufacturing - Evidence from matched employer-employee data,"
Working Paper Series
196, Trade Union Institute for Economic Research.
- Nannan Lundin & Lihong Yun, 2009. "International Trade and Inter-Industry Wage Structure in Swedish Manufacturing: Evidence from Matched Employer-Employee Data," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 87-102, 02.
- William T. Dickens, 1986. "Wages, Employment and the Threat of Collective Action by Workers," NBER Working Papers 1856, National Bureau of Economic Research, Inc.
- Michael P. Keane, 1991.
"Individual heterogeneity and interindustry wage differentials,"
Discussion Paper / Institute for Empirical Macroeconomics
54, Federal Reserve Bank of Minneapolis.
- Michael P. Keane, 1993. "Individual Heterogeneity and Interindustry Wage Differentials," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 134-161.
- Goux, Dominique & Maurin, Eric, 1999. "Persistence of Interindustry Wage Differentials: A Reexamination Using Matched Worker-Firm Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 492-533, July.
- Kijima, Yoko, 2006. "Why did wage inequality increase? Evidence from urban India 1983-99," Journal of Development Economics, Elsevier, vol. 81(1), pages 97-117, October.
- Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2005.
"Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms,"
Journal of International Economics,
Elsevier, vol. 66(1), pages 75-105, May.
- Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2003. "Trade, Wages and the Political Economy of Trade Protection: Evidence from the Colombian Trade Reforms," CEPR Discussion Papers 3877, C.E.P.R. Discussion Papers.
- Thomas Sampson, 2011. "Assignment Reversals: Trade, Skill Allocation and Wage Inequality," CEP Discussion Papers dp1105, Centre for Economic Performance, LSE.
- Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
- Puja Vasudeva Dutta, 2007. "Trade Protection and Industry Wages in India," ILR Review, Cornell University, ILR School, vol. 60(2), pages 268-286, January.
- Gene M. Grossman, 2004. "The Distribution of Talent and the Pattern and Consequences of International Trade," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 209-239, February.
When requesting a correction, please mention this item's handle: RePEc:jet:dpaper:dpaper278. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Kobayashi)
If references are entirely missing, you can add them using this form.