Wages Over the Course of Structural Transformation: Evidence from India

This paper uses labor force survey data from India for 2000 and 2012 to examine how wages behave over the course of structural transformation. We find that wage employment between 2000 and 2012 displays the patterns one would expect for an economy undergoing structural transformation, with employmen...

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Bibliographic Details
Published inAsian development review Vol. 36; no. 2; pp. 131 - 158
Main Authors Hasan, Rana, Molato, Rhea
Format Journal Article
LanguageEnglish
Published Manila MIT Press 01.09.2019
Asian Development Bank
World Scientific Publishing
Subjects
Agglomeration
Agriculture
Employment
Informal economy
Labor force
Labor productivity
Occupations
Rural communities
Self employment
structural change
Transformation
Urban areas
wage level and structure
wages
Wages & salaries
Women
Workers
Asia
Africa
India
Latin America
wages
wage level and structure
structural change
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Summary:This paper uses labor force survey data from India for 2000 and 2012 to examine how wages behave over the course of structural transformation. We find that wage employment between 2000 and 2012 displays the patterns one would expect for an economy undergoing structural transformation, with employment shares shifting from agriculture to industry and services, and from rural to urban areas and larger cities within urban areas. These shifts, as well as a shift to nonroutine occupations and routine manual occupations outside of agriculture, are associated with an improvement in average wages. Finally, simple Mincerian wage regressions confirm that jobs in larger firms and big cities are associated with significantly higher wages—even more so for women. Overall, our results are consistent with the notion that policies that encourage the expansion of the formal sector and employment in larger firms are crucial for development.
ISSN:0116-1105
1996-7241
DOI:10.1162/adev_a_00134