Rising Wage Inequality in India: a Translog Cost Function Analysis

Srivastava Archana ()
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Srivastava Archana: Indian Institute of Technology, Kanpur, India

Ovidius University Annals, Economic Sciences Series, 2011, vol. XI, issue 1, 1966-1970

Abstract: The paper attempts to investigate the various determinants of rising wage inequality in India since 1980s. A translog cost function along with the share equations is used to evaluate the impact of various factors such as trade, technology, liberalization phase, efficiency (technical, allocative and cost) and inflation on rising wage inequality between the skilled and unskilled labour. Seemingly unrelated regressions (SUR) procedure by Zellner is used for the estimation purpose. Annual Survey of Industries data at the two digit level from the year 1973-74 to 2007-08, has been used for the study. The findings reveal that trade and technology both tend to increase the wage inequality. Further, elasticity results reveal that capital, skilled labour, unskilled labour etc have turned out to be, substitutes since 1989, although few of them were complementary before the liberalisation phase.

Keywords: Translog Cost Function; Seemingly Unrelated Regressions; Wage Inequality; Trade; Efficiency (search for similar items in EconPapers)
JEL-codes: D24 F16 J31 O1 (search for similar items in EconPapers)
Date: 2011
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