Green Transitions and Paycheck Inequality: Wage Differentials in Indian Manufacturing

Abstract

Differences in wages paid to workers are always an important issue in the growth of manufacturing sector. The present study attempts to analyse the differences in wages in manufacturing sector across Indian states from 1980-81 to 2021-22. To study the trends in real wages, the analysis is conducted at nine points in time. i.e., 1980-81, 1985-86, 1990-91, 1995-96, 2000-01, 2005-06, 2010-11, 2015-16 and 2021-22. The study has also made analysis of state-specific intercept coefficients of fixed effect model to statistically conclude that there exists a significant difference in wages paid to workers across states. Further, the study has explored various determinants of wages in manufacturing sector. It has been found that labour productivity, capital intensity and employment per factory exerts a positive and significant impact on real wages while concentration of firms is having negative and significant effect on real wages.