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Earning Differentials Across Social Groups: Evidences from India

Majumder, Rajarshi (2007): Earning Differentials Across Social Groups: Evidences from India. Published in: Indian Journal of Labour Economics , Vol. 50, No. 4 (December 2007)

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Earning differentials in labour market leads to multidimensional aspects of deprivation and disadvantage. While the ‘deprived’ are excluded from participation in society, such exclusion may also cause deprivation. In economic terms, disparity in labour markets has far-reaching consequences because of its impact on earnings and asset creation. In this paper we look at earnings differentials across social groups in the Indian Wage Labour Market. The results indicate that the share of the Excluded Groups - SCs, STs, and OBCs - in Wage Employment is lower than their corresponding share in population and their shares in Wage Earnings are even lower. Earning ratios has been continuously declining, most sharply in the 2000-05 period. The share of these Excluded Groups in the Top Wage classes is also negligible, with most of them concentrated in the Bottom Wage class. Upward mobility from lower to higher wage classes is low for these groups compared to others, thereby increasing the disparity between the groups. Skewed Occupational Distribution and predominance of Casual workers among the excluded groups are major reasons for such disparity. Earning differential is pronounced both in the economically lagging and advanced states and a rise in disparities in the post-reform period indicates that high growth-high private investment-tertiary sector boom is creating new divide in the society in terms of deprivation and discrimination. As discrimination leads to disparities in capability formation and ownership of assets, the excluded groups are unable to participate in the growing economic affluence and are being increasingly marginalized. Inclusive growth strategies and participatory development programmes with substantial local-global synergy is the need of the hour to combat earning differentials in labour market.

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