Migrant workers in urban labour markets in India: wage differentials, assimilation and occupational attainment

Abstract

The paper examines the wage differentials and returns to human capital of migrant and non-migrant workers in the urban labour markets in India. Using unit-level data from the Employment, Unemployment and Migration Survey (2007–2008), the regression analysis examines the effect of various factors particularly human capital and years since migration in determining wage differentials in different specifications. The results showed that the migrants (both rural and urban) earned higher daily wages than non-migrant workers across states, but the wage advantage was higher for urban migrants than rural migrants both in regular and casual work. Segregating the wage gap into different observable factors, the results showed that the migrant wage advantage was mainly explained by the difference in nature of employment, type of occupation, location of job and other socio-religious factors but not due to differences in human capital. However, in case of urban migrants, education plays a major role in explaining the wage advantage over non-migrants, particularly in regular wage work. Even though the migrants showed a higher wage advantage, the gap reduced with the duration of stay at the destination labour market. While modelling the occupational attainment among migrants and non-migrants, the study found that education plays an important role in enabling migrants, especially urban migrants, get access to higher-paying occupations.