Determinants of inequality in Indian regular wage employment, 1993–2012

Abstract

Through the use of decomposition exercises, this article estimates the relative contributions of different factors to inequality among Indian regular wage employees between 1993/94 and 2011/12. It also estimates the contributions of returns to factors and shares of factors determining inequality. The author finds that the single largest contributor among the regular wage workforce in India is access to higher education. However, institutional factors such as union membership and employment in the public sector also play important roles, indicating that inequality cannot be simply reduced to demographic or technical factors, but must also take into account the institutional structure of an economy.