Wage differential between caste groups: Are younger and older cohorts different?

Abstract

Recent literature has provided evidence that a gender and caste-based wage discrimination can exert negative economic impact on a country's development process. Given the enormous contribution of young population to India's workforce, we examine whether there is any caste-based discrimination considering 'demographic' distinction. Using employment and unemployment National Sample Survey data from India for two rounds during the last two decades (1993 and 2010), we find rising wage gap between privileged and marginalized groups within younger and older cohorts across the distribution and over time. Furthermore, we decompose the wage gap using the counterfactual decomposition into endowment effect (explained by differences in characteristics) and a discrimination effect (attributable to unequal returns to covariates). We find that the discrimination effect against marginalized castes (in both cohorts) decreases, implying an increasing endowment effect across the distribution of the wage gap. This discrimination effect is more pronounced among younger compared to older cohorts.

The Cost of Being ‘Backward’ in India: Socio-religious Discrimination in the Labour Market

“…Ignoring this past discrimination may increase the endowment effect of the earnings gap, resulting in an overestimation of differences in human capital. The potential misspecification due to differences in support of the individual characteristics can be accounted with Ñopo's matching algorithm (Arabsheibani et al, 2018). Thus, another decomposition method is used which assumes different probabilistic distributions of comparable individual characteristics including human capital.…”

Poverty, wealth inequality and financial inclusion among castes in Hindu and Muslim communities in Uttar Pradesh, India

“…Banerjee and Knight (1985) using survey data in Delhi found gross wage difference between scheduled and non-scheduled caste. In similar lines, Arabsheibani et al (2018); Das and Dutta (2007); Madheswaran and Attewell (2007) found caste-based wage gaps in different demographic groups using National Sample Survey (NSS) data. Bhaumik and Chakrabarty (2006) investigated earnings differences across caste groups and between Muslims and Non-Muslims during 1987-1999.…”

Poverty, wealth inequality, and financial inclusion among castes in Hindu and Muslim communities in Uttar Pradesh, India

“…Banerjee and Knight (1985) using a survey data in Delhi found gross wage difference between scheduled and non-scheduled caste. In similar lines, Arabsheibani, Gupta, Mishra, and Parhi (2018); Das and Dutta (2007); Madheswaran and Attewell (2007) found caste-based wage gaps in different demographic groups using National Sample Survey (NSS) data. Bhaumik and Chakrabarty (2006) investigated earnings differences across caste groups and between Muslims and Non-Muslims during 1987−99.…”