Status of Vocational Education and Wage Gap in the Indian Economy: Empirical Evidence

Harshil Sharma (), Minaketan Beher () and Santosh Mehrotra ()
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Harshil Sharma: Indus Action
Minaketan Beher: Jawaharlal Nehru University
Santosh Mehrotra: University of Bath

The Indian Journal of Labour Economics, 2025, vol. 68, issue 1, No 11, 238 pages

Abstract: Abstract Vocational education in India has been gaining recognition and quality to bridge the wage gap between skills and employability. The relationship between vocational education and the wages in the Indian economy is complex and multifaceted. Skills mismatch, sectoral nuances, gender imbalances, and geographical factors contribute to the wage gap. This paper seeks to measure and quantify skills in the Indian economy by taking vocational education as a loose proxy of skills. The article tries to explain the current status of technical and vocational education in India critically analysing current skilling policy ecosystem. The paper also deals with wage gap analysis and locating wage inequality across sectors and occupations trying to find the extent of wage inequality in the Indian economy. Mincer regression analysis is conducted in the paper with two model analyses, that is Ordinary Least Square (OLS) and Heckman Sample Selection Model, to check whether vocational education positively and significantly affects the wages of individuals in India. This paper reveals three conclusions, that is the duration of courses taught through vocational education is decreasing, the extent of wage inequality across occupations and across sectors over time is increasing in the Indian economy. Positive relationship between vocational education and wages existed in Indian economy from 2011–12 to 2017–18 and now relation shows insignificant results in 2023–24 which plausibly maybe due to influx of short-term courses. Skill development policies path taken by policymakers may prove problematic in the long run as the duration of skill development courses is decreasing, relationship with wages has become insignificant which would have a detrimental effect on the quality of the training offered in the case of India.

Keywords: Skills; Vocational education; Wage gap; Indian economy; Mincer regression (search for similar items in EconPapers)
JEL-codes: I20 I26 J21 J24 J31 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s41027-025-00558-0

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