Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282727 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16600
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
minimum wages
wage inequality
India
JEL: 
J31
J38
Document Type: 
Working Paper

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