Determinants of inter-industry wage structure in India
Abstract
This paper deals with an analysis of the main factors ex
plaining the inter-industry wage differentials in manufac
turing sector of the Indian economy. It examines the basic
theoretical framework which can provide a satisfactory
explanation of the inter-industry wage structure. Taking the
cross-section data on the two-digit level manufacturing in
dustries for two years 1960 and 1964, the regression tech
nique is applied to test alternative models based on the
"expected ability to pay" and the "technology" hypotheses.
The major finding of the study is that the skill-mix and
productivity are the two main determinants of inter-indus
try wage structure in India. The policy implication of this
finding is that if a more rational wage structure is to be
evolved in the organized manufacturing sector in India, it
can be done most effectively by following the policy of mo
dernization and rationalization of the existing low produc
tivity industries wh;le envisaging rapid development of the
industrial sector during the course of the next decade.
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