Minimum Wages and Changing Wage Inequality in India

Saloni Khurana, Kanika Mahajan and Kunal Sen

No 16600, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 an increase in minimum wages by one percent led to an increase in wages for workers in the lowest quintile by 0.17%. This effect is smaller at upper wage quintiles and insignicant 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.

Keywords: minimum wages; wage inequality; India (search for similar items in EconPapers)
JEL-codes: J31 J38 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2023-11
New Economics Papers: this item is included in nep-dev, nep-inv and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Minimum wages and changing wage inequality in India (2023)
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