Employment Change in Occupations in Urban India: Implications for Wage Inequality

Abstract

This paper analyses employment and wage change patterns in India for a period spanning almost three decades, 1983 to 2011. Using data from National Sample Survey Organisation, this study finds evidence of job polarization and wage polarization in urban India particularly strong during the 1990s and somewhat moderate during the 2000s. Our analysis shows a sharp increase in employment and wages in high-skill jobs involving non-routine cognitive tasks, throughout the periods. This expansion in employment has happened at the cost of reduction in middle-skill jobs involving routine tasks. We find that while decline in routine manual employment started in the 1980s, routine cognitive task intensive occupations like clerical, office assistants, and sales started shrinking their share of employment in the 1990s. We argue that the reduction in employment share in routine manual occupations is a result of mechanisation in agriculture and manufacturing sector while the decline in routine cognitive employment share is more of a result of technological upgradation in the Indian industry.