Employment Change in Occupations in Urban India: Implications for Wage Inequality

Abstract

This article analyses employment and wage change patterns in India for a period spanning almost three decades, from 1983–84 to 2011–12. Using data from the National Sample Survey Organization, the study finds evidence of job polarization (employment growth in low‐ and high‐skill jobs and decline in middle‐skill jobs) in urban India during the 1990s and 2000s, and employment upgrading in the 1980s. Consistent with the literature on job polarization, the article finds a reduction in employment share in routine task intensive occupations. The author argues that this reduction is a result of both mechanization and technological upgrading within Indian industry. On the other hand, an increase in employment share in both low‐skill and high‐skill occupations is argued to be a result of growing self‐employment and informal sector employment in urban India. The wage change patterns are largely consistent with the employment change patterns. The analysis suggests that structural change in occupation is an important factor for understanding earnings inequality in India.

Job Polarisation in India: Structural Causes and Policy Implications

“…The study by Vashisht and Dubey (2018) concur with the findings of Sarkar (2017). They argue that the relative demand for non-routine cognitive tasks has increased four times since 1998 than in the period before.…”

“…Second, whilst analysing the trend of real daily wage for each decile of workers, Sarkar (2017) found that the value for the highest (10 th decile) and the lowest (90 th decile) showed a sharp monotone increase whilst that of the median (50 th decile) showed a decline, especially after 1999. Growth of average earnings for occupational quintiles during the same period sheds light on wage disparities as shown in Figure 7.…”

“…Most recently, two studies that use disaggregated data on employment available from National Survey Sample Office (NSSO) raise some questions about the origin and nature of polarisation observed in India (Sarkar, 2017;Vashisht and Dubey, 2018). Sarkar 2017 The divergence between industries that contributed to output or value-added and those that contributed to employment in manufacturing sector is shown in Figure 6.…”

“…In a study examining 702 professions globally, Frey and Osborne (2013) have shown that 'middleskill' jobs that require routine cognitive and manual applications would be automated in the shortterm. As a result, they argue that India, which has 65 per cent of global IT off-shore In this context, this paper examines the nature and extent of job polarisation in the Indian economy by analysing the trends of employment using disaggregated data from National Sample Survey for the period 1983-2012 as given in Sarkar (2017) and Vashisht and Dubey (2018). In particular, the study is interested in understanding the persistence of routine occupations in India which contradicts theoretical expectations.…”

Evolution of wage inequality in India (1983–2017): The role of occupational task content

“…The evolution of earnings inequality in India has been examined by Kijima (2006) and Chamarbagwala (2006), and later by Azam (2012). A study by Sarkar (2019) looks at changes in earnings inequality under the lens of a changing occupational structure in India up to 2011. She concludes that earnings inequality has been increasing in India and, to some extent, this can be explained by employment and wage polarization in the country.…”