Wage Differences by Caste and Religion in India

Abstract

This paper attempts to systematically look at the differences in wages earned between male workers belonging to various caste and religious identities in India, and how that has changed over time. I use data from seven different rounds of National Sample Survey (NSS) to investigate the wage differences that accrue due to different caste and religious identities. I find that Indian Muslim men earn slightly lower wages compared to their upper-caste Hindu counterparts, and this difference has grown slightly over the period of 1983 to 2011. However, this difference is not uniform across all location, education and worker categories. While there are hardly any differences in wages earned between Muslim workers and upper-caste Hindu workers for unskilled labourers, for more educated salaried workers, the differences are high especially in urban areas. A similar pattern emerges for workers of lower-castes, although their earnings in many cases are even lower than Muslim workers. Lack of entrepreneurship among the urban Muslims and lower-caste Hindus in the formal sector might be responsible for their plights. Policies that encourage skill development and development of entrepreneurship among Muslims and especially lower-caste Hindus in the formal sector will help alleviating the conditions of these demographic groups.