A Decade of Economics Reforms: Whither Employment?

University Library of Munich, Germany, MPRA Paper 01/2007;
Source: RePEc


Employment creation and wage security have been primary goals of developing countries. The present paper analyses the wage-employment scenario in India in the post-reform period. The workforce structure is exhibiting upward mobility across wage classes, moving towards regular employment, and shifting in favour of tertiary sector jobs – the pace decelerating in the second half of the study period. Thus expansion of employment has not been as distress a phenomenon as often apprehended. There is a shift of middle wage level jobs from regular to casual employment, leading to declining inequality among casual workers and increased inequality among regulars. However, availability of mandays is decreasing, especially among casual workers. Perhaps jobs are continuously and decisively getting transformed from regular to casual employment and then being outsourced to the self-employeds. Increasing disparity between workers of High and Low Income States, and between White collar and Blue Collar occupations are concerns that need to be addressed. Creating more mandays of work and facilitating capacity building through education and skill formation should be the policy focus.

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    ABSTRACT: This paper investigates the evolution and structure of wage inequality among adult male workers engaged in regular and casual wage employment in India during a period of radical economic change. The analysis exploits data from nationally representative employment surveys and uses decomposition techniques to examine the role played by educational achievement and industry affiliation. This paper finds that there are striking differences for the two groups of workers. Wage inequality rose between 1983 and 1999 among regular workers but fell among casual workers. While human capital (as embodied in age and education) is one of the major factors explaining both the level of and change in regular wage inequality, geographic location is the key determinant of casual wage inequality. Industry affiliation plays an equally important role for both sets of workers. These are also consistently the most important contributors to changes in inequality though the directional effects differ among the different sets of workers.


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