Decomposing the Certified and Uncertified Skill Wage Gap for Production Workers in India

Bhanu Pratap Singh (), Akash Yadav and Kailash Chandra Pradhan
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Bhanu Pratap Singh: Banaras Hindu University
Akash Yadav: Banaras Hindu University
Kailash Chandra Pradhan: Mahatma Gandhi Central University

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 35, 888-916

Abstract: Abstract Due to the lower capacity of formal learning institutions, informal learning is the prominent source of learning to skill a larger population in India. Still, many skilled workers in India face the problem of lower wages and difficulty finding employment opportunities because of skill certification. The present study examines the impact of skill certification on monthly wages using augmented Mincer wage equations. Oaxaca-Blinder decomposition is employed to study wage differentials between certified and uncertified skill workers. The empirical findings suggest that workers’ characteristics such as skill certification, extended training period, superior occupational status, permanent job tenure, higher education level, membership in trade unions, and job experience help them earn higher monthly wages. The wage gap between certified and uncertified skill production workers is also observed based on skill certification. In addition, the wage gap is reduced by characteristics such as the long duration of the training, membership in trade unions, and job experience. However, uncertified skill workers face wage discrimination with rising age. In India, it is crucial to reduce wage differential due to skill certification to improve competitiveness, efficiency, and productivity in the labor market. Therefore, the government should promote skill development and certification of skills acquired through informal learning to achieve developmental goals.

Keywords: Skill development; Skill certification; Wage gap; Decomposition (search for similar items in EconPapers)
JEL-codes: E24 J31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01118-x

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