GENDER WAGE DIFFERENTIALS IN INDIAN LABOUR MARKET

Abstract

This paper seeks to address the issue of gender discrimination in wages and earnings in India. We use data from the 68th round (2011-12) of National Sample Survey on Employment Unemployment schedule (NSS-EUS) to explore the gender wage gap in the formal sector by setting up a log wage regression model. We introduce a gender dummy along with labour characteristics like education, experience etc. as explanatory variables to estimate gender discrimination when men and women have identical wage structure and further ascertain how returns to productivity characteristics varies for both the genders.

Next, we introduce the classic Oaxaca Blinder decomposition technique to ascertain the factors that contribute to such a wage gap in the labour market: whether it is primarily due to the endowment effect i.e. differences in covariates like education, health, work experience etc. or there is significant presence of the unexplained factor (or simply discrimination) in the market.

Finally, this paper compares and interprets the results of the two aforementioned methodologies while acknowledging its limitations and underlying assumptions and attain a better understanding of the labour market and factors that cause this wage gap. The paper concludes with a discussion as to why gender parity is desirable for sustainable economic growth.