Publication:
Changing Wage Structure in India in the Post-Reform Era: 1993-2011

Loading...
Thumbnail Image
Files in English
English PDF (1.31 MB)
349 downloads
English Text (130.69 KB)
35 downloads
Date
2015-09
ISSN
Published
2015-09
Editor(s)
Abstract
This paper documents the changing structure of wages in India over the post-reform era, the roughly two-decade period since 1993. To investigate the factors underlying these changes, a supply-demand framework is applied at the level of the Indian state. While real wages have risen across India over the past two decades, the increase has been greater in rural areas and, especially, for unskilled workers. The analysis finds that, in rural areas, the changing wage structure has been driven largely by relative supply factors, such as increased overall education levels and falling female labor force participation. Relative wage changes between rural and urban areas have been driven largely by shifts in employment, notably into unskilled-intensive sectors like construction.
Link to Data Set
Citation
Jacoby, Hanan G.; Dasgupta, Basab. 2015. Changing Wage Structure in India in the Post-Reform Era: 1993-2011. Policy Research Working Paper;No. 7426. © World Bank. http://hdl.handle.net/10986/22849 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Report Series
Other publications in this report series
  • Publication
    The Future of Poverty
    (Washington, DC: World Bank, 2025-07-15) Fajardo-Gonzalez, Johanna; Nguyen, Minh C.; Corral, Paul
    Climate change is increasingly acknowledged as a critical issue with far-reaching socioeconomic implications that extend well beyond environmental concerns. Among the most pressing challenges is its impact on global poverty. This paper projects the potential impacts of unmitigated climate change on global poverty rates between 2023 and 2050. Building on a study that provided a detailed analysis of how temperature changes affect economic productivity, this paper integrates those findings with binned data from 217 countries, sourced from the World Bank’s Poverty and Inequality Platform. By simulating poverty rates and the number of poor under two climate change scenarios, the paper uncovers some alarming trends. One of the primary findings is that the number of people living in extreme poverty worldwide could be nearly doubled due to climate change. In all scenarios, Sub-Saharan Africa is projected to bear the brunt, contributing the largest number of poor people, with estimates ranging between 40.5 million and 73.5 million by 2050. Another significant finding is the disproportionate impact of inequality on poverty. Even small increases in inequality can lead to substantial rises in poverty levels. For instance, if every country’s Gini coefficient increases by just 1 percent between 2022 and 2050, an additional 8.8 million people could be pushed below the international poverty line by 2050. In a more extreme scenario, where every country’s Gini coefficient increases by 10 percent between 2022 and 2050, the number of people falling into poverty could rise by an additional 148.8 million relative to the baseline scenario. These findings underscore the urgent need for comprehensive climate policies that not only mitigate environmental impacts but also address socioeconomic vulnerabilities.
  • Publication
    Exports, Labor Markets, and the Environment
    (Washington, DC: World Bank, 2025-07-14) Góes, Carlos; Conceição, Otavio; Lara Ibarra, Gabriel; Lopez-Acevedo, Gladys
    What is the environmental impact of exports? Focusing on 2000–20, this paper combines customs, administrative, and census microdata to estimate employment elasticities with respect to exports. The findings show that municipalities that faced increased exports experienced faster growth in formal employment. The elasticities were 0.25 on impact, peaked at 0.4, and remained positive and significant even 10 years after the shock, pointing to a long and protracted labor market adjustment. In the long run, informal employment responds negatively to export shocks. Using a granular taxonomy for economic activities based on their environmental impact, the paper documents that environmentally risky activities have a larger share of employment than environmentally sustainable ones, and that the relationship between these activities and exports is nuanced. Over the short run, environmentally risky employment responds more strongly to exports relative to environmentally sustainable employment. However, over the long run, this pattern reverses, as the impact of exports on environmentally sustainable employment is more persistent.
  • Publication
    The Macroeconomic Implications of Climate Change Impacts and Adaptation Options
    (Washington, DC: World Bank, 2025-05-29) Abalo, Kodzovi; Boehlert, Brent; Bui, Thanh; Burns, Andrew; Castillo, Diego; Chewpreecha, Unnada; Haider, Alexander; Hallegatte, Stephane; Jooste, Charl; McIsaac, Florent; Ruberl, Heather; Smet, Kim; Strzepek, Ken
    Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
  • Publication
    The Asymmetric Bank Distress Amplifier of Recessions
    (Washington, DC: World Bank, 2025-07-11) Kim, Dohan
    One defining feature of financial crises, evident in U.S. and international data, is asymmetric bank distress—concentrated losses on a subset of banks. This paper proposes a model in which shocks to borrowers’ productivity dispersion lead to asymmetric bank losses. The framework exhibits a “bank distress amplifier,” exacerbating economic downturns by causing costly bank failures and raising uncertainty about the solvency of banks, thereby pushing banks to deleverage. Quantitative analysis shows that the bank distress amplifier doubles investment decline and increases the spread by 2.5 times during the Great Recession compared to a standard financial accelerator model. The mechanism helps explain how a seemingly small shock can sometimes trigger a large crisis.
  • Publication
    Impact of Heat Waves on Learning Outcomes and the Role of Conditional Cash Transfers
    (Washington, DC: World Bank, 2025-07-14) Miranda, Juan José; Contreras, Cesar
    This paper evaluates the impact of higher temperatures on learning outcomes in Peru. The results suggest that 1 degree above 20°C is equivalent to 7 and 6 percent of a standard deviation of what a student learns in a year for math and reading tests, respectively. These results hold true when the main specification is changed, splitting the sample, collapsing the data at school level, and using other climate specifications. The paper aims to improve understanding of how to deal with the impacts of climate change on learning outcomes in developing countries. The evidence suggests that conditional cash transfer programs can mitigate the negative effects of higher temperatures on students’ learning outcomes in math and reading.
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Wage Subsidy and Labor Market Flexibility in South Africa
    (2009-03-01) Kearney, Marna; Go, Delfin S.; Korman, Vijdan; Robinson, Sherman; Thierfelder, Karen
    In this paper, the authors use a highly disaggregate general equilibrium model to analyze the feasibility of a wage subsidy to unskilled workers in South Africa, isolating and estimating its potential employment effects and fiscal cost. They capture the structural characteristics of the labor market with several labor categories and substitution possibilities, linking the economy-wide results on relative prices, wages, and employment to a micro-simulation model with occupational choice probabilities in order to investigate the poverty and distributional consequences of the policy. The impact of a wage subsidy on employment, poverty, and inequality in South Africa depends greatly on the elasticities of substitution of factors of production, being very minimal if unskilled and skilled labor are complements in production. The desired results are attainable only if there is sufficient flexibility in the labor market. Although the impact in a low case scenario can be improved by supporting policies that relax the skill constraint and increase the production capacity of the economy especially towards labor-intensive sectors, the gains from a wage subsidy are still modest if the labor market remains very rigid.
  • Publication
    Labor Market Policy in Developing Countries : A Selective Review of the Literature and Needs for the Future
    (World Bank, Washington, DC, 2007-09) Fields, Gary S.
    This paper presents a selective overview of the literature on modeling labor market policies in developing countries. It considers welfare economics, theoretical models, and empirical evidence to highlight the three general features needed in future research on labor market policy in developing countries. The author identifies desirable research components (welfare economics, theoretical modeling, and empirical modeling) and pitfalls in the literature (inappropriate use of productivity, reliance on wrong kinds of empirical studies, lack of cost-benefit analysis, attention to only a subset of the goods and bads, and fallacy of composition). The paper concludes with suggested topics and methods for future research. The author states that sound labor market policy requires sound labor market models. The paper makes a case for developing policy based on explicit evaluation criteria, specific theoretical models, and comprehensive empirical evidence.
  • Publication
    Mauritius
    (World Bank, Washington, DC, 2015-09) World Bank Group
    Mauritius is a high middle-income country with low levels of poverty and inequality. The headcount poverty level was 6.9 percent in 2012; measured by the international standard of United States (U.S.) $2 per day (PPP), poverty was less than 1 percent. On inequality, Mauritius also fared well compared to its peer middle-income countries. On the negative side, Mauritius’ growth has not been equally shared, despite the general improvement in welfare. The economy’s polarization was associated with a structural transformation from labor-intensive industries to services and knowledge-intensive industries. Inclusiveness remains the main challenge for the current growth pattern. When Mauritius will be able to become a high-income country will depend on its ability to improve the labor force’s skill set, develop infrastructure, and further improve the business environment to attract foreign direct investment (FDI) and generate domestic investment. Reduction in inequality and boost of shared prosperity will require more growth and a more pro-poor pattern of growth. An increase in female labor force participation, reduction of high youth unemployment rates, improving the efficiency of the social protection system will reduce growing skills mismatch facilitating inclusive growth and eradicating poverty in Mauritius.
  • Publication
    India - Living Conditions and Human Development in Uttar Pradesh : A Regional Perspective
    (Washington, DC, 2010-04) World Bank
    Uttar Pradesh, the largest state in India, has 170 million inhabitants who represent 16.2 percent of India's population. Uttar Pradesh (UP) is classified as one of the 'lagging states of India' for its slow growth, low human development indicators and high concentration of the poor. UP occupies an important position in India because of its size and as a determinant of the country's overall progress. UP has continuously slipped behind India as a whole. Growth or the lack of it has a mirror image in poverty trends. In the 1970s, UP's poverty level was almost at the national average and actually came below the all-India level in 1977-78. Poverty climbed again in 1983. Since the 1990s, slow growth in industry and services has been responsible for UP's lag. The report is organized as: it starts with an assessment of trends in growth, poverty, and inequality presents in chapter one. It notes a slower reduction in poverty in urban areas and in the Western and Eastern regions. Chapter two presents a poverty profile, its non-income dimensions and silent features of the dynamics of poverty. Chapter three presents the underpinnings of growth and reduction in poverty, the report examines patterns of employment, wages and migration patterns in UP. Chapter four focuses on the latent potential of the agricultural sector. Chapters five and six examine trends, challenges and achievements in education and health indicators. Chapter seven addresses access to social assistance programs. Chapter eight presents possible solutions for improving delivery of services.
  • Publication
    Working Out of Poverty : Job Creation and the Quality of Growth in Africa
    (Washington, DC : World Bank, 2008) Sekkel Gaal, Melissa; Fox, Louise
    This paper explores Africa's economic performance and the creation of jobs over the decade and more since 1995, recognizing that some standard labor concepts are difficult to apply to conditions prevailing in Africa. The intent of the paper is to identify the economic factors behind the more successful outcomes and the options available for improving the quality of growth. The report focuses on several key issues: how has the structure of economic growth and labor demand shaped the job creation process? Does rigidity in African labor markets impede job creation? Have the quality and quantity of the labor supply affected job creation? What policies have been pursued to raise the quality of the African labor force? What does the expanding "informal" sector mean for the labor market and the quality of growth? Is it a route out of poverty or a low-skills trap? Throughout the paper, the focus is on the factors, exogenous and endogenous, that are linked to the outcomes, and the implications that these factors may have for raising the quality of Africa's economic growth. Some countries have reversed many of the vicious cycles underlying Sub- Saharan Africa's generally poor performance on job creation; those countries are highlighted where adequate data are available, and the lessons these experiences offer all stakeholders in meeting the growth and poverty reduction challenges of the future are pointed out. The paper concludes that Africa's record of poor economic performance has in part been an inevitable result of its colonial heritage-the low levels of human capital at independence. It is also a function of the ensuing policies pursued, especially those that led to the debt crisis and the subsequent recession and public sector restructuring. In most countries, these costs have been paid, and the future looks brighter as a result.

Users also downloaded

Showing related downloaded files

  • Publication
    Business Ready 2024
    (Washington, DC: World Bank, 2024-10-03) World Bank
    Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.
  • Publication
    Classroom Assessment to Support Foundational Literacy
    (Washington, DC: World Bank, 2025-03-21) Luna-Bazaldua, Diego; Levin, Victoria; Liberman, Julia; Gala, Priyal Mukesh
    This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.
  • Publication
    World Development Report 2006
    (Washington, DC, 2005) World Bank
    This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.
  • Publication
    Global Economic Prospects, June 2024
    (Washington, DC: World Bank, 2024-06-11) World Bank
    After several years of negative shocks, global growth is expected to hold steady in 2024 and then edge up in the next couple of years, in part aided by cautious monetary policy easing as inflation gradually declines. However, economic prospects are envisaged to remain tepid, especially in the most vulnerable countries. Risks to the outlook, while more balanced, are still tilted to the downside, including the possibility of escalating geopolitical tensions, further trade fragmentation, and higher-for-longer interest rates. Natural disasters related to climate change could also hinder activity. Subdued growth prospects across many emerging market and developing economies and continued risks underscore the need for decisive policy action at the global and national levels. Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.
  • Publication
    Argentina Country Climate and Development Report
    (World Bank, Washington, DC, 2022-11) World Bank Group
    The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.