Rural Wage Dynamics in India: What Role does Inflation Play?

Sujata Kundu

Working Papers from eSocialSciences

Abstract: This paper studies the relationship between rural wage growth and inflation in India to assess the risk of a wage - price spiral to the inflation trajectory. The results of a cointegration and Vector Error Correc tion Model (VECM) show that in the long - run both nominal agricultural wages and non - agricultural wages exhibit statistically significant positive relationship with rural prices. Findings of a dynamic panel data model using Arellano - Bover/Blundell - Bond syst em of generalized method of moments (GMM) structure show that during November 2013 - November 2017, changes in rural prices had a positive and significant impact on changes in nominal wages, controlling for other determinants such as non - agricultural wages, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) wages and rainfall departure from normal. The results also point to significant stickiness in nominal wages and the presence of a statistically significant positive impact of non - farm (con struction sector) wages on agricultural wages. This paper does not find any robust empirical support for the risk of a wage - price spiral in India during the period of study.

Keywords: rural wage; inflation; MGNREGS; construction wage (search for similar items in EconPapers)
Date: 2018-05
Note: Working Papers
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.esocialsciences.org/Articles/show_Artic ... kingPapers&aid=12774

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:ess:wpaper:id:12774

Access Statistics for this paper

More papers in Working Papers from eSocialSciences
Bibliographic data for series maintained by Padma Prakash ().