Skill Development, Skill Premium, and Technological Change

Abstract

This chapter looks to analyze three aspects skill: premium or wage incentive, existence of skill-biased technical change, and problems with current vocational training programs prevailing in India. All these three aspects will be analyzed with a gender-based approach specifically looking at female outcomes in comparison to male outcomes. This study would also throw some light on why labor force participation rate has been low in the case of females in India. Using NSSO data, it is found that skill premium was falling for women in labor-intensive sectors and rising in capital-intensive sectors, but it had no major effect on skill premium of total workforce due to low female labor force participation rate. Overall skill premium is stagnant for total workforce, and capital skill complementarity is not present in case of Indian economy. Movement of labor in Indian economy has been from one unskilled sector (agriculture) to another unskilled sector (construction). The study also finds that the major reason behind skill development system being supply driven is lack of involvement of the private sector financially.