Do Minimum Wages Reduce Inequality? Evidence from India

Saloni Khurana (), Kanika Mahajan and Kunal Sen ()
Additional contact information
Saloni Khurana: IIFT andWorld Bank, 1818 H Street, NW, Washington, DC 20433 USA
Kunal Sen: UNU-WIDER, Katajanokanlaituri 6 B FI-00160 Helsinki, Finland & University of Manchester.

No 139, Working Papers from Ashoka University, Department of Economics

Abstract: Using nationally representative data on employment and earnings, this paper documents a fall in wage inequality in India over the last two decades. It then examines the role played by increasing minimum wages for the lowest skilled workers in India in contributing to the observed decline. Exploiting regional variation in changes in minimum wages over time in the country, we find that a 1% increase in minimum wages led to a 0.17% increase in wages for workers in the lowest quintile. This effect is smaller at upper wage quintiles and insignificant for the highest wage quintile. Counterfactual wage estimations show that the increase in minimum wages explains 26% of the decline in wage inequality in India during 1999-2018. These findings underscore the important role played by rising minimum wages in reducing wage disparities in India.

Pages: 83
Date: 2025-02-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://dp.ashoka.edu.in/ash/wpaper/paper139_0.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ash:wpaper:139

Access Statistics for this paper

More papers in Working Papers from Ashoka University, Department of Economics
Bibliographic data for series maintained by Ashoka University ().