Abstract
Using annual survey data from 6 cities in different regions of India, the author analyzes the rapid increase in wage inequality of information technology (IT) professionals in India from 2002 to 2015. The author describes within-group and between-group wage inequality trends and decompose wage inequality change into changes in the distribution of IT professionals in IT sectors attributes, both observed and unobserved, and changes in the returns to those attributes. The author finds that growing regional wage disparities, rising returns to unobserved IT skills, and rising returns to IT education explain most of the wage inequality increase. Rising IT skill premiums are due primarily to increasing relative demand for IT skilled professionals within IT sectors rather than to demand shifts across IT sectors. The timing of wage inequality change has been erratic, suggesting a key role played by reform policies.
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