Effect of Affirmative Policies on Wages in India

Abstract

The resurgence of a new generation of skilled workers, with a vast majority of them enjoying increased incomes through much of their careers, has been widely hailed as one of the primary reasons for India’s remarkable economic growth. However, there still exists a significant difference in wages for similarly skilled workers from different social groups in the country. Consequently, such wage disparities have been at the forefront of public policy deliberations, and a vast majority of the remedial formulations have relied on affirmative safeguards to rectify these imbalances. While the merits of such policies are rightfully debated, direct empirical evidence on their effectiveness have been inadequate. This article seeks to redress the lacuna by using newer samples from the National Sample Survey Organization which enumerates wage data based on all the four major social groups in India. The results indicated that members from the three underprivileged groups entering the labour force after such policies were enacted have higher earnings than similar workers who entered the labour force before such policies were actualised.