Wage Discrimination in India's Formal and Informal Labour Markets
43 Pages Posted: 16 Jun 2016 Last revised: 16 Jan 2018
Date Written: June 15, 2016
The study examines the extent of gender and caste-based discrimination among the formally and informally employed in India using the National Sample Survey Office (NSSO) Employment-Unemployment Survey (EUS) data for the four major rounds from 1999-00 to 2011-12. The study applies Oaxaca-Blinder decomposition after sample selection correction to find the extent of discrimination. The study also looks at the extent of discrimination over the entire wage distribution using quantile decomposition techniques. The study finds wage discrimination to be significantly higher in informal employment compared to the formally employed. Caste-based discrimination is found to be lower compared to gender-based discrimination. The quantile decomposition results for gender shows the presence of a sticky floor effect in both formal and informal employment. In case of caste-based discrimination, we find evidence of discrimination effect remaining stable and insignificant in informal employment whereas in formal employment wage gaps are seen to follow a glass ceiling effect. Our results highlight the need for better regulation of the informal labour market in India.
Keywords: Gender, Caste, Wage, Discrimination, Decomposition, Quantile, Formal, Informal, Regulation
JEL Classification: J31, J38, J46, J71, J78
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