Khanna, Shan anu; Goel, Deep i; Mo isse e, René
A icle
Decomposi ion analysis o ea nings inequali y in u al
India: 2004-2012
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ORIGINAL ARTICLE Open Access
Decomposi ion analysis o ea nings
inequali y in u al India: 2004–2012
Shan anu Khanna
1
, Deep i Goel
2,3*
and René Mo isse e
4
* Co espondence:
[email p o ec ed]
2
Depa men o Economics, Delhi
School o Economics, Uni e si y o
Delhi, 110007 Delhi, India
3
IZA-Ins i u e o Labo , Bonn,
Ge many
Full lis o au ho in o ma ion is
a ailable a he end o he a icle
Abs ac
We analyze he changes in ea nings o paid wo ke s (wage ea ne s) in u al India om
2004/05 o 2011/12. Real ea nings inc eased a all pe cen iles, and he pe cen age
inc ease was la ge a he lowe end. Consequen ly, ea nings inequali y declined.
Recen e ed in luence unc ion decomposi ions show ha h oughou he ea nings
dis ibu ion, excep a he e y op, bo h changes in “wo ke cha ac e is ics”and in
“ e u ns o hese cha ac e is ics”inc eased ea nings, wi h he la e ha ing played
a bigge ole. Decomposi ions o inequali y measu es e eal ha al hough he change
in cha ac e is ics had an inequali y-inc easing e ec , chie ly a ibu able o inc eased
educa ion le els, inequali y declined because wo ke s a lowe quan iles expe ienced
g ea e imp o emen s in e u ns o hei cha ac e is ics han hose a he op.
JEL: JEL Classi ica ion: J30, J31, O53
Keywo ds: Ea nings, Inequali y, Ea ning dis ibu ion, Ru al India
1 In oduc ion
In hei discussion o India’s economic g ow h, Ko wal e al. (2011) poin o he exis -
ence o wo Indias: “One o educa ed manage s and enginee s who ha e been able o
ake ad an age o he oppo uni ies made a ailable h ough globaliza ion and he
o he —a huge mass o unde educa ed people who a e making a li ing in low p oduc -
i i y jobs in he in o mal sec o — he la ges o which is s ill ag icul u e.”This pape is
abou he second India ha mainly esides in i s u al pa s. Ag icul u e, he mains ay
o he u al economy, con inues o employ he la ges sha e o he Indian wo k o ce,
bu i s con ibu ion o g oss alue added (GVA) is much smalle . In 2011, he employ-
men sha es o ag icul u e, indus y, and se ices we e 49, 24 and 27 %, espec i ely,
whe eas hei sha es in GVA we e 19, 33, and 48 %, espec i ely (GOI 2015). In
addi ion, be ween 2004/05 and 2011/12, eal g oss domes ic p oduc (GDP) in hese
sec o s g ew a 4.2, 8.5 and 9.6 % pe annum, espec i ely, making ag icul u e he
slowes g owing sec o o he economy (au ho s’calcula ions based on RBI 2015).
Gi en hese igu es, he conce n abou whe he high o e all GDP g ow h has bene i -
ed hose a he bo om, and o wha ex en hey ha e bene i ed compa ed o hose a
he op, is e en mo e pe inen o u al India. We he e o e ocus on u al India and
examine how eal ea nings o paid wo ke s (wage ea ne s) e ol ed o e he 7-yea
pe iod be ween 2004/05 and 2011/12.
© The Au ho (s). 2016 Open Access This a icle is dis ibu ed unde he e ms o he C ea i e Commons A ibu ion 4.0 In e na ional
License (h p://c ea i ecommons.o g/licenses/by/4.0/), which pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium,
p o ided you gi e app op ia e c edi o he o iginal au ho (s) and he sou ce, p o ide a link o he C ea i e Commons license, and
indica e i changes we e made.
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18
DOI 10.1186/s40175-016-0064-8
Se e al s udies ha e documen ed ha along wi h he high g ow h a es o GDP ha ha e
cha ac e ized he Indian economy since he 1980s, he e has been an inc ease in inequal-
i y.
1
Howe e , mos o hese s udies ha e ei he ocused on consump ion expendi u e (Sen
and Himanshu 2004; Cain e al. 2010; Mo i am and Vakulabha anam 2012; Jaya aj and
Sub amanian 2015; Da e al. 2016)
2
o on ea nings o paid wo ke s in u ban India (Kijima
2006; Azam 2012a). Two no able excep ions a e Hna ko ska and Lahi i (2013) and Jacoby
and Dasgup a (2015). Hna ko ska and Lahi i (2013) ocus on wage compa isons be ween
u al and u ban a eas be ween 1983 and 2010. They ind ha u ban agglome a ion led o a
massi e inc ease in u ban labo supply ha in u n educed he u al-u ban wage gap. Un-
like Hna ko ska and Lahi i (2013), we ocus exclusi ely on u al India o p o ide a mo e
de ailed pic u e o he changes wi hin his sec o . Jacoby and Dasgup a (2015) adop he
supply-demand-ins i u ions (SDI) amewo k pionee ed by Ka z and Mu phy (1992) and
Bound and Johnson (1992), o decompose wage changes be ween 1993 and 2011 in bo h
u al and u ban India. We use a e y di e en app oach, namely, he ecen e ed in luence
unc ion (RIF) decomposi ion de eloped by Fi po, Fo in, and Lemieux (2009) o s udy
ea nings e olu ion in u al India.
3
Jacoby and Dasgup a (2015) decompose he change in
an indi ec measu e o wage inequali y, namely, he ela i e wages o educa ed and unedu-
ca ed wo ke s, in o changes in employmen sha es o di e en demog aphic g oups and
changes in he indus ial composi ion. In his pape , we ocus on di ec measu es o in-
equali y such as he Gini and he 90/10 pe cen ile a io, and decompose changes in hese
measu es in o changes in wo ke cha ac e is ics and changes in e u ns o hese cha ac e -
is ics. Ou inding ha he change in e u ns o cha ac e is ics is d i ing he decline in
ea nings inequali y in u al India is a no el one. Mo eo e , we documen changes no jus
a he mean bu also a a ious quan iles. I is impo an o do so because se e al s udies
ha e ound ha ea nings inequali y is mainly concen a ed a he uppe end. Fo India,
Azam (2012a) and Kijima (2006) ind his o u ban wage ea ne s and Bane jee and Pike y
(2005) ind i o income ax paye s. We use uncondi ional quan ile eg essions o accoun
o he e ec s o wo ke s’cha ac e is ics a di e en quan iles and he eby make in e ences
abou hei e ec s on ea nings inequali y. Finally, we use he RIF decomposi ions o di ide
he o e all change in ea nings inequali y in o a composi ion e ec ( he componen due o
changes in he dis ibu ion o wo ke cha ac e is ics) and a s uc u e e ec ( he componen
due o changes in e u ns o hese cha ac e is ics).
We ind ha du ing he pe iod om 2004 o 2012, eal ea nings among paid wo ke s
inc eased a all pe cen iles and he pe cen age inc ease was g ea e a lowe pe cen iles.
Consequen ly, ea nings inequali y declined in u al India. The RIF decomposi ions e eal
ha h oughou he ea nings dis ibu ion, excep a he e y op, bo h he compos-
i ion e ec and he s uc u e e ec inc eased ea nings, wi h changes in he la e
ha ing played a bigge ole. Decomposi ions o inequali y measu es e eal ha in
spi e o he composi ion e ec ha ing had an inequali y-inc easing ole, inequali y ell
because wo ke s a lowe quan iles expe ienced g ea e imp o emen s in e u ns o
hei cha ac e is ics han hose a he op. Ea nings inequali y inc eased as wo ke s
acqui ed highe le els o educa ion. A he same ime, lowe e u ns o highe educa-
ion educed inequali y.
The es o he pape is o ganized as ollows. Sec ion 2 discusses he me hodology
used o analyze he change in ea nings. Sec ion 3 desc ibes he da a and he analysis
sample. Sec ion 4 p esen s he esul s, and Sec ion 5 concludes.
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 2 o 26
2 Me hodology
We b ie ly explain he RIF eg ession o uncondi ional quan iles, ollowed by he RIF
decomposi ion echnique. Fo a de ailed exposi ion o his and o he decomposi ion
echniques, see Fo in e al. 2011.
2.1 Uncondi ional quan ile eg essions
Uncondi ional quan ile eg essions (UQR) in oduced by Fi po e al. (2009) help us exam-
ine he ma ginal e ec s o co a ia es on he uncondi ional quan iles o an ou come a i-
able. UQR di e om he adi ional quan ile eg essions (Koenke and Basse 1978) in
ha he la e examine he ma ginal e ec s on he condi ional quan iles. Fo ins ance, i
we obse e ha he condi ional quan ile eg ession coe icien s o college educa ion in-
c ease as we mo e om he i s o he nin h decile, we can say ha ha ing mo e people
wi h a college educa ion would inc ease ea nings dispe sion wi hin a g oup o indi iduals
ha ing he same ec o o co a ia e alues. Howe e , in o de o claim ha college educa-
ion inc eases o e all ea nings dispe sion (among all indi iduals i espec i e o hei
co a ia es), we need o ely on uncondi ional quan ile eg essions. To unde s and UQRs,
we begin wi h he concep o an in luence unc ion (IF).
The IF o any dis ibu ional s a is ic ep esen s he in luence o an obse a ion on
ha s a is ic. Speci ically, le wdeno e ea nings and le q
θ
deno e he θ h quan ile o
he uncondi ional ea nings dis ibu ion. Then,
IF w;qθ
ðÞ¼θ−Iw≤qθ
g
ðÞ= wqθ
ðÞ ð1Þ
whe e I:
g is an indica o unc ion and
w
is he densi y o he ma ginal dis ibu ion o
ea nings. The RIF is ob ained by adding back he s a is ic o he IF. Thus, he RIF o he
θ h quan ile is gi en by:
RIF w;qθ
ðÞ¼qθþIF w;qθ
ðÞ¼qθþθ−Iw≤qθ
g
ðÞ= wqθ
ðÞ ð2Þ
No e ha he expec ed alue o he RIF is q
θ
i sel . The condi ional expec a ion o
he RIF modelled as a unc ion o ce ain explana o y a iables, X, gi es us he UQR o
RIF eg ession model:
ERIF w;qθ
ðÞjX½¼mθXðÞ ð3Þ
In i s simples o m,
ERIF w;qθ
ðÞjX½¼Xβð4Þ
whe e β ep esen s he ma ginal e ec o Xon he θ h quan ile. βcan be es ima ed by
o dina y leas squa es (OLS) whe ein he dependen a iable is eplaced by he es i-
ma ed RIF. The RIF is es ima ed by plugging he sample quan ile, b
qθ, and he empi ical
densi y, d
wqθ
ðÞ, he la e es ima ed using ke nel me hods, in Eq. (2).
2.2 RIF decomposi ion
The RIF decomposi ion di ides he o e all change in any dis ibu ional s a is ic in o a
s uc u e e ec (due o he changes in e u ns o cha ac e is ics/co a ia es) and a com-
posi ion e ec (due o he changes in he dis ibu ion o co a ia es). Compa ed o o he
decomposi ion me hods such as he Machado-Ma a (Machado and Ma a 2005), he RIF
decomposi ion has he added ad an age o u he di iding he s uc u e and composi ion
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 3 o 26
e ec s in o he con ibu ion o each co a ia e. In his way, i is closes in spi i o he
decomposi ion me hod p oposed by Blinde (1973) and Oaxaca (1973).
In he case o quan iles, he RIF decomposi ion is ca ied ou using he es ima ed
UQR/RIF eg ession coe icien s explained in Sec ion 2.1. The RIF eg ession coe i-
cien s o each yea (T) a e gi en by:
^
βT;θ¼Xi∈TXTi⋅X′
Ti
−1Xi∈Td
RIF wTi;qTθ
ðÞ⋅Xi;T¼1;2ð5Þ
The agg ega e decomposi ion o any uncondi ional quan ile θis gi en by:
^
Δθ
To al ¼X2
^
β2;θ−
^
β1;θ
|fflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflffl}
^
Δθ
S uc u e
þðX2−X1Þ
^
β1;θ
|fflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflffl}
^
Δθ
Composi ion
ð6Þ
To examine he con ibu ion o each co a ia e, he wo e ms in (6) can be u he
w i en as:
^
Δθ
Composi ion ¼Xk¼1
KX2k−X1k
^
β1k;θð7Þ
^
Δθ
S uc u e ¼Xk¼0
KX2k
^
β2k;θ−
^
β1k;θ
ð8Þ
Equa ions (7) and (8) ep esen he de ailed decomposi ions o he composi ion and
s uc u e e ec s, espec i ely.
The de ailed decomposi ion o he s uc u e e ec has a limi a ion when ca ego ical
a iables a e included as co a ia es. The choice o he omi ed o e e ence g oup ( o
cas e, educa ion, indus y, occupa ion, o s a e o esidence in ou analysis) can in lu-
ence he con ibu ion o each co a ia e o he s uc u e e ec . Since he choice o he
e e ence ca ego ies is a bi a y, esul s o he de ailed decomposi ion can a y. Exis ing
solu ions o he omi ed ca ego y p oblem come a he cos o in e p e abili y (see
Fo in e al. 2011). To ensu e he obus ness o ou esul s ega ding he con ibu ion
o ac o -speci ic s uc u e e ec s, we use se e al speci ica ions, each o which uses a
di e en se o omi ed ca ego ies o he ca ego ical a iables.
Though he abo e discussion on RIF decomposi ion ocused on quan iles, i is also
applicable o any o he dis ibu ional s a is ic. We p esen he RIF decomposi ion o
quan iles as well as selec ed inequali y measu es including he Gini.
3 Da a
We use wo ounds o he na ionally ep esen a i e Employmen Unemploymen
Su ey (EUS) conduc ed by he Na ional Sample Su ey O ganiza ion (NSSO) o he
yea s 2004/05 and 2011/12. Ou a ge popula ion is wage ea ne s be ween he ages o
15 and 64 (wo king age), li ing in u al a eas
4
o 23 majo s a es o India.
5
In bo h yea s, wage ea ne s cons i u ed a ound 25 % o he u al wo king age popula-
ion.
6
Nominal ea nings a e con e ed in o eal e ms (2004/05 p ices) using consume
p ice indices p o ided by he Labou Bu eau, Go e nmen o India.
7
We also im he
eal ea nings dis ibu ion o each yea by d opping 0.1 % o obse a ions om he op
and he bo om.
8
Ul ima ely, ou analysis sample consis s o , 44,634 wo ke s in 2004/05
and 36,050 in 2011/12. This co esponds o abou 104 million paid wo ke s in 2004/05
and abou 118 million in 2011/12.
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 4 o 26
4 Resul s
In his sec ion we p esen ou indings ela ed o he e olu ion o he ea nings dis ibu-
ion in u al India be ween 2004/05 and 2011/12.
4.1 Changes in he dis ibu ion o ea nings om paid wo k
Figu e 1 p esen s he ke nel densi y es ima es o he log o eal weekly ea nings o
2004/05 and 2011/12. The ea nings densi y o each yea is skewed o he igh imply-
ing ha he median ea ning was less han he mean. O e he 7-yea pe iod, he ea n-
ings densi y shi ed o he igh and became mo e peaked (less dispe sed). The mean
eal weekly ea nings inc eased om 391 o abou 604 upees, while median inc eased
om 263 o 457 upees. Fo 2004/05, he all-India u al po e y line (de ined in e ms
o minimum consump ion expendi u e needed o mee a speci ied nu i ional and li -
ing s anda d) was 447 upees pe capi a pe mon h (Planning Commission 2014).
9
Thus, he mean (median) eal mon hly ea nings was 3.5 (2.4) imes he po e y line,
and in 2011/12 i was 5.4 (4.1) imes his alue.
4.1.1 Changes in ea nings inequali y
Figu e 2 plo s he eal weekly ea nings (in upees) a each pe cen ile o 2004/05 and
2011/12. A each pe cen ile, ea nings we e highe in 2011/12 han in 2004/05. The gap
be ween he wo cu es e eals ha he inc ease in ea nings was, in absolu e e ms (i.e.,
measu ed in upees), g ea e o highe pe cen iles. Fo ins ance, eal weekly ea nings
inc eased by 99 upees a he i s decile, 194 upees a he median, and 307 upees a he
nin h decile. Howe e , as seen in Fig. 3, he pe cen age inc ease in ea nings was g ea e a
he lowe end o he dis ibu ion.
10
Fo ins ance, ea nings inc eased by 91 % a he i s de-
cile, 74 % a he median, and 44 % a he nin h decile. Thus, ea nings inequali y―de ined
in ela i e a he han absolu e e ms―declined o e he 7-yea pe iod.
Fig. 1 Ea nings densi ies, 2004/05 and 2011/12
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 5 o 26
Figu e 4 con i ms he decline in ea nings inequali y: I shows ha he Lo enz cu e
o weekly ea nings o 2011/12 lies abo e he one o 2004/05, unambiguously indica -
ing ha inequali y declined.
Table 1 supplemen s Figs. 2, 3, and 4 and shows how a ious summa y measu es o
inequali y changed o e ime. The a io o he ( aw) ea nings a he 25 h o he 10 h
pe cen ile was s eady a abou 1.52. A he middle o he dis ibu ion, he e was some
dec ease in inequali y as measu ed by he 60 h o he 40 h pe cen ile. In con as , he
a io a he 90 h o he 75 h pe cen ile ell e y sha ply om 1.72 o 1.53. Thus, i is
clea ha he dec ease in inequali y mainly came om changes a he op and middle
o he dis ibu ion han om he bo om.
The dec ease in inequali y is also e lec ed in he a iance o log ea nings and in he Gini
coe icien s. The Gini o eal weekly ea nings ell om 0.462 o 0.396.
11
This is in sha p con-
as o he pic u e in u ban India whe e ea nings inequali y emained i ually unchanged
Fig. 2 Real weekly ea nings, by pe cen ile, 2004/05 and 2011/12
Fig. 3 Change in log eal weekly ea nings, by pe cen ile, 2004/05 o 2011/2012
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 6 o 26
o e he pe iod: The Gini o eal weekly ea nings in u ban India was 0.506 in 2004/5 and
0.499 in 2011/12. Jaya aj and Sub amanian (2015) use consump ion expendi u e da a (also
om he NSSO) and ind ha be ween 2004/05 and 2009/10, he Gini declined om 0.305
o 0.299 in u al India. Fo u ban India, i inc eased om 0.376 o 0.393. I is no ewo hy
ha while hedi ec iono changein u alinequali y ha hey ind using consump ion
expendi u e is he same as wha we ind using ea nings, his is no he case o u ban in-
equali y. This makes a s ong case o s udying bo h consump ion and ea nings inequali y.
4.1.2 Wage a es o days wo ked: decomposi ion o he a iance in log ea nings
So a ou analysis has been abou weekly ea nings. The EUS also collec s da a on he
numbe o hal -days wo ked du ing he week. The ollowing equa ions illus a e he
decomposi ion o ea nings inequali y as measu ed by he a iance in log ea nings:
Weekly ea nings EðÞ¼A e age daily wage a e WðÞNumbe o days wo ked DðÞ
⇒ln EðÞ¼ln WðÞþln DðÞ
⇒Va ln EðÞ½
|fflfflfflfflfflfflffl{zfflfflfflfflfflfflffl}
1
¼Va ln WðÞ½
|fflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflffl}
2
þVa ln DðÞ½
|fflfflfflfflfflfflffl{zfflfflfflfflfflfflffl}
3
þ2Co a iance ln WðÞ;ln DðÞ½
|fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl}
4
The decomposi ion ells us how much o he ea nings inequali y (1) is accoun ed by
inequali y o wage a es (2), inequali y o wo kdays (3), and he co-mo emen o wage
a es and wo kdays (4). We implemen his decomposi ion o bo h yea s and hen cal-
cula e he di e ence be ween co esponding e ms.
12
The esul s a e shown in Table 2.
Fig. 4 Lo enz cu es o eal weekly ea nings, 2004/05 and 2011/12
Table 1 Inequali y measu es o eal weekly ea nings om paid wo k
2004/05 2011/12
25-10 1.52 1.51
60-40 1.41 1.32
90-75 1.72 1.53
Va iance o log ea nings 0.61 0.48
Gini 0.462 0.396
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 7 o 26
In bo h yea s, he co a iance be ween wage a es and days wo ked was posi i e im-
plying ha highly paid wo ke s wo ked mo e numbe o days. Also, ea nings inequali y
was la gely on accoun o inequali y o wages a es a he han inequali y o days
wo ked o because highly paid wo ke s also wo ked o a longe ime: O e 70 % o he
ea nings inequali y was due o inequali y o wage a es.
13
The las ow o Table 2 p esen s he decomposi ion o decline in ea nings inequali y
as seen in he dec ease in he a iance o log ea nings. Abou 50 % o his decline was
due o a decline in inequali y o wage a es. The es was due o a dec ease in inequali y
o days wo ked (abou 30 %) and a weake ela ionship be ween highly paid wo ke s
wo king mo e numbe o days (abou 20 %).
4.2 Uncondi ional quan ile eg ession esul s
Be o e mo ing o he eg ession esul s, we p esen some desc ip i e s a is ics in Table 3
o paid wo ke s in u al India. Mean (log) weekly ea nings inc eased o e he pe iod.
The a e age age also inc eased by abou 1.7 yea s, pe haps an indica ion o la e en y
in o he labo ma ke as mo e people acqui e highe educa ion. The e was also an in-
c ease in he sha e o males, ma ied wo ke s, and Muslims. The p opo ion o hose
belonging o ST (Scheduled T ibes) and SC (Scheduled Cas es) declined.
14
Educa ion
le els ose signi ican ly: The sha e o illi e a es dec eased by a ound 11 pe cen age
poin s, while he sha e o each schooling le el, including college educa ion, inc eased.
We classi y indus ies in o se en ca ego ies: ag icul u e, manu ac u ing (including
mining), cons uc ion, u ili ies, wholesale and e ail ade, public adminis a ion (includ-
ing de ense), and o he se ices (including educa ion, heal h, eal es a e, and inance).
O e he pe iod, he majo change in he indus ial dis ibu ion came p ima ily om
ag icul u e, which saw a 12 pe cen age poin dec ease, and cons uc ion, which saw a
oughly equi alen inc ease.
15
Nex , we es ima e ea nings eg essions (bo h OLS and UQR) sepa a ely o he yea s
2004/05 and 2011/12 wi h he log o eal weekly ea nings as he dependen a iable. The
co a ia es include all cha ac e is ics showninTable3and hes a eo esidence.
16
Age en-
e s he eg essionsinaquad a ic o masap oxy o wo kexpe ience.“O he s”, and illi e -
a es, a e he omi ed ca ego ies o cas e and educa ion, espec i ely. Ag icul u e, and
labo e s and unskilled wo ke s, a e he omi ed ca ego ies o indus y and occupa ion, e-
spec i ely. Figu es 5 and 6 plo eg ession coe icien s o selec co a ia es. The le column
o plo s is o 2004/05 and he igh o 2011/12. Fo each selec ed co a ia e, UQR eg es-
sion coe icien s a e plo ed agains he co esponding nine deciles. The dashed lines ep e-
sen he 95 % con idence in e al o he coe icien s. The solid ho izon al line is he OLS
coe icien . As we mo e ac oss deciles, whe he coe icien s o a pa icula cha ac e is ic
a e inc easing o dec easing e eals he e ec o changing he cha ac e is ic on wage
inequali y. An upwa d slope sugges s ha inc easing he sha e o wo ke s wi h ha
Table 2 Decomposi ion o ea nings inequali y
Va [ln(E)] Va [ln(W)] Va [ln(D)] 2 ∗Co [ln(W), ln(D)]
2004/05 0.61 0.43 0.13 0.06
2011/12 0.48 0.36 0.09 0.03
Change o e ime −0.14 −0.07 −0.04 −0.03
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 8 o 26
Changes in he composi ion o and e u ns o indus y and occupa ion may be pa ly d i en
by changes in educa ion. To ha ex en , we should no be including hem as con ols i we
a e in e es ed in s udying he o e all con ibu ion o educa ion. Following he decompos-
i ion li e a u e, we also es ima e Table 4 wi hou indus y and occupa ion con ols. The e-
sul s a e in Appendix 1.
23
Compa ing wi h Table 4, one majo di e ence wi h ega d o he
composi ion e ec is ha wi hou indus y and occupa ion con ols, he change in dis ibu-
ion o educa ion plays a signi ican ole e en in he bo om o he dis ibu ion (as seen by
he 50-10 measu e). O he wise, he conclusions a e quali a i ely he same.
4.3.3 De ailed decomposi ion o he s uc u e e ec
The bo om panel o Table 4 p esen s he decomposi ion o he s uc u e e ec . Bo h he
90-10 and he Gini decomposi ions e eal ha educa ion, occupa ion, and being ma ied
we e la gely esponsible o he nega i e s uc u e e ec . Fu he , compa ing he 50-10 and
90-50 measu es shows ha o all h ee cha ac e is ics, i was changes in e u ns a he op
end o he dis ibu ion ha mainly con ibu ed o he o e all nega i e s uc u e e ec .
This was also no ed in Fig. 6 whe e he e u ns o educa ion (wi h illi e a es as he base
ca ego y) ac ually declined a he highe end o he wage dis ibu ion, whe eas e u ns did
no change signi ican ly in he middle. The same is ue o he e u n o highe occupa ions
(wi h labo e s and unskilled wo ke s as he base ca ego y). Compa ing wi h Appendix 1
(wi hou indus y and occupa ion con ols), he conclusions b oadly emain he same.
Table 4 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12 (Con inued)
Ma ied −0.103** 0.013 −0.116*** −0.009
(0.043) (0.032) (0.033) (0.006)
Cas e 0.064 0.012 0.052 0.005
(0.055) (0.031) (0.047) (0.011)
Muslim 0.013* 0.004 0.010* 0.000
(0.007) (0.004) (0.006) (0.001)
Cons an
a
0.177 0.114 0.062 −0.094***
(0.256) (0.208) (0.178) (0.035)
Boo s ap s anda d e o s shown in pa en heses. Signi ican a *10 %, **5 %, and ***1 %
a
The cons an does no con ain esidual noise (de ined as di e ence be ween ac ual and p edic ed s a is ics). This is
because he RIF me hod decomposes he change o e ime be ween p edic ed s a is ics (see Eq. (6))
Fig. 8 De ailed decomposi ion o he composi ion e ec o selec co a ia es
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 15 o 26
The con ibu ion o e u ns o indus y in Table 4 is in e es ing: i changed in such a
manne ha i had an inequali y dec easing e ec a he bo om and an inequali y-
inc easing e ec a he op as seen by he nega i e and posi i e e ec s o he 50-10
and 90-50 measu es, espec i ely. I is he e o e no su p ising ha i has an insigni i-
can con ibu ion owa d he 90-10 measu e.
In Table 4, he con ibu ion o he “cons an ” e m o he o e all s uc u e e ec is la ge
and s a is ically signi ican . I is ha d o gi e a meaning ul in e p e a ion o i as i depends
on he choice o omi ed ca ego ies o ca ego ical a iables. As desc ibed in Sec ion 2.2,
he choice o omi ed ca ego y a ec s he decomposi ion o he s uc u e e ec . We es
o he sensi i i y o ou esul s is-à- is choice o omi ed ca ego ies by e-es ima ing
Table 4 using wo addi ional speci ica ions p esen ed in Appendix 2. Gi en ha e u ns o
educa ion we e la gely d i ing he s uc u e e ec , in he i s speci ica ion we change he
omi ed ca ego y o educa ion om illi e a es o he highes educa ional ca ego y,
namely, “college and beyond”. As seen in Appendix 2, he e u ns o educa ion a e now
posi i e ( is-à- is college and beyond) and he cons an e m is now nega i e. The b oad
conclusions a e he e o e he same. In he second speci ica ion, we con e all ca ego ical
a iables in o dummy a iables by de ining he a iable o be “0” o he omi ed ca ego y
and de ining i o be “1” o he emaining ca ego ies.
24
Educa ion con inues o explain a
la ge pa o he composi ion and s uc u e e ec s.
4.4 Robus ness check using s a e po e y lines
Recall ha we used he Consume P ice Index –Ru al Labou e s (CPI-RL) o de-
la e nominal ea nings o 2004/05 p ices. These p ice indices do no accoun o
spa ial p ice adjus men ac oss s a es. As a obus ness check, we use s a e-le el
po e y lines compu ed using he Tendulka me hodology (Planning Commission
2014) which accoun o spa ial a ia ion ac oss s a es. We eplica e Tables 1 and 4
using s a e-le el po e y lines and p esen hem in Appendix 3. Ou esul s a e o-
bus o he choice o de la o s.
5 Conclusions
Using na ionally ep esen a i e da a om he Employmen Unemploymen Su ey, we
examine he changes in eal weekly ea nings om paid wo k o u al India om 2004/05
o 2011/12.
Fo wage ea ne s who cons i u ed abou a qua e o he u al wo king age popula ion,
we ind ha hei eal ea nings inc eased a all pe cen iles. Using consump ion expendi u e
da a ha span he en i e popula ion, o he s udies
25
ha e also documen ed an imp o emen
in all pa s o he dis ibu ion. Taken oge he , he e is clea e idence ha economic g ow h
in he pos - e o m pe iod (a e he ea ly 1990s) has been accompanied by a educ ion in
po e y.
26
A he same ime, acco ding o o icial es ima es, in 2011/12, 25.7 % o he u al
popula ion was below he po e y line. This igu e ep esen s abou 216.7 million poo pe -
sons, a la ge numbe o people li ing below a minimum accep able s anda d.
27
Ou analysis also e eals ha ea nings inequali y in u al India dec eased o e he 7-
yea pe iod, and abou hal o he decline can be accoun ed o by he decline in daily
wage inequali y. Howe e , while he u al Gini ell o e his pe iod, i emained i ually
unchanged in u ban India. This sugges s ha he dynamics o ea nings is di e en o
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 16 o 26
he wo sec o s. This could be because he unde lying s uc u al cha ac e is ics a e di -
e en ac oss he wo sec o s. Fo example, while ag icul u e is he la ges employe in
u al India, o u ban India i is se ices. I could also be he esul o di e en edis-
ibu i e policies ollowed in he wo sec o s. These aspec s need o be ecognized
when designing u u e policies o ackle inequali y in he wo egions.
Agg ega e decomposi ions o he change in inequali y measu es e eal ha he change
in e u ns o wo ke cha ac e is ics was mainly esponsible o he dec ease in ea nings
inequali y. Fu he de ailed decomposi ions e eal ha highe le els o educa ion in he
popula ion con ibu ed o an inc ease in ea nings inequali y, while lowe e u ns o highe
educa ion con ibu ed o a dec ease. Ru al India expe ienced a cons uc ion boom du ing
his pe iod ha also con ibu ed o he dec ease in ea nings inequali y.
Some s udies (Da e al. 2016; Thomas 2015) ha e a ibu ed he igh ening o he u al
casual labo ma ke be ween 2000 and 2012 o he expansion o schooling and o he con-
s uc ion boom. O he s (Azam 2012b; Be g e al. 2015; Imbe and Papp 2015) ha e ound
ha he MGNREGS (Maha ma Gandhi Na ional Ru al Employmen Gua an ee Scheme),
a la ge-scale employmen gua an ee scheme ini ia ed in u al India in 2005, led o an
inc ease in casual wages.
One canno be ce ain ha his end o ising casual wages and declining ea nings
inequali y will con inue in o he u u e. Rega dless o he unde lying causes o he e-
cen decline in ea nings inequali y in u al India, ola ili y in global c op p ices and he
d ough condi ions cu en ly expe ienced by la ge pa s o he coun y because o wo
consecu i e weak monsoons a e impo an eminde s ha policies designed o os e
employmen oppo uni ies and wage g ow h o unskilled wo ke s ou side o ag icul u e
a e c ucial o imp o ing he economic wellbeing o he second pa o India.
Finally, we end wi h he ca ea ha al hough India has he lowes Gini alue
among he BRICS coun ies,
28
and we ind ha ea nings inequali y declined in
u al India be ween 2004/05 and 2011/12, hese ac s mask ex eme dep i a ions
and inequi ies in access o heal h ca e, educa ion, and physical in as uc u e such
as sa e wa e and sani a ion (D èze and Sen 2013). One needs o be cognizan ha
ex eme inequali ies p e ail in many o he dimensions beyond ea nings and con-
sump ion expendi u e.
Endno es
1
A no able excep ion is Du a (2005). Fo he pe iod, 1983–1999, a he all-India
le el, she inds an inc ease in wage a e inequali y among egula sala ied wo ke s, bu
adec ease among casual labo .
2
The e a e some ad an ages in looking a consump ion expendi u e ins ead o ea nings
(Goldbe g and Pa cnik 2007). The o me a e a be e measu e o li e ime wellbeing and
su e om ewe epo ing e o s. In spi e o his, we eel ha i is impo an o jux apose
he wo o ge a comple e pic u e. This is especially impo an as he wo measu es may
exhibi di e en ends. K uege and Pe i (2006) documen his o he USA and hen de-
elop a model o show how income inequali y can a ec consump ion inequali y.
3
I is ha d o es ablish he supe io i y o one app oach o e he o he . In he SDI
amewo k, changes in supply (changes in employmen sha es o demog aphics g oups)
and demand (changes in indus ial composi ion) a e assumed exogenous and he e o e
una ec ed by changes in he ela i e wage s uc u e. In he RIF decomposi ion, he
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 17 o 26
eedback be ween changing cha ac e is ics and changing e u ns is igno ed. Bo h hese
assump ions igno e gene al equilib ium e ec s.
4
In 2004/05, 75.3 % o India’s wo king age popula ion li ed in u al a eas, while in
2011/12 his igu e was 71.1 %.
5
In 2004/05 India had 28 s a es and 7 union e i o ies. We excluded he s a es and
union e i o ies o which he e we e no p ice de la o s. The 23 included s a es a e
Andh a P adesh, Assam, Biha , Chha isga h, Guja a , Ha yana, Himachal P adesh,
Jammu and Kashmi , Jha khand, Ka na aka, Ke ala, Madhya P adesh, Maha ash a,
Manipu , Meghalaya, O issa, Punjab, Rajas han, Tamil Nadu, T ipu a, U a P adesh,
U a anchal, and Wes Bengal. In bo h yea s, hey cons i u ed 99.3 % o India’s u al
wo king age popula ion.
6
In 2011/12, o he emaining u al wo king age popula ion, 30 % we e sel -employed,
2 % we e unemployed, and 43 % we e no in he labo o ce. The main eason o
es ic ing ou analysis o wage ea ne s is ha he EUS does no collec ea nings da a
o sel -employed indi iduals. Kijima (2006) impu es he ea nings o he sel -employed
using Mince ian equa ions es ima ed on he sample o egula wage/sala ied wo ke s.
We e ain om his impu a ion as i imposes iden ical e u ns o co a ia es o bo h
se s o wo ke s, an assump ion ha may no be ue.
7
We use he Consume P ice Index –Ru al Labou e s (CPI-RL), he ele an p ice
index o u al a eas.
8
While we a e awa e ha his may unde es ima e ou inequali y measu es, we do his
in o de o emo e po en ial da a en y e o s.
9
The po e y line is based on he me hodology p oposed by he Tendulka Commi -
ee in 2009. The commi ee was appoin ed by he Planning Commission, Go e nmen
o India.
10
Using consump ion expendi u e da a (also collec ed by he NSSO), o he pe iod
be ween 2004/05 and 2009/10, Jaya aj and Sub amanian (2015) ind a simila pa e n o
an inc ease in eal consump ion expendi u es a all deciles o u al India, wi h he
highes g ow h occu ing a he hi d and ou h deciles.
11
I we conside daily wage a es ins ead o eal weekly ea nings, he Gini ell om
0.398 o 0.358. This indica es ha i is wage a es, and no so much he ime spen
wo king, ha is d i ing he dec ease in ea nings inequali y. We s udy his in de ail in
he nex sub-sec ion whe e we show he same esul by decomposing he a iance in
log ea nings.
12
Al hough he a iance o log weekly ea nings allows us o quan i y a “wage a e e -
ec ”,a“wo kday e ec ”, and a “co a iance e ec ”, i does no necessa ily all when one
upee is ans e ed om a ich wo ke o a poo one. Howe e , his limi a ion is incon-
sequen ial since we ha e shown (using he Lo enz cu es) ha inequali y has unam-
biguously allen o e ime.
13
Admi edly, as he e a e bounds o he numbe o days wo ked, anging om hal a
day o 7 days, his may ha e pa ly con ibu ed o he lowe inequali y o days wo ked.
14
Scheduled Cas es and T ibes (SC and ST, espec i ely) a e adminis a i e ca ego ies
and ep esen g oups o cas es and ibes ha a e en i led o bene i s om a i ma i e
ac ion policies such as ese a ions in educa ional ins i u ions and go e nmen jobs o
o e come his o ical social and economic disc imina ion agains hem. OBC s ands o
O he Backwa d Classes and is a collec i e e m used by he Go e nmen o India o
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 18 o 26
classi y o he cas es ha a e socially and educa ionally backwa d ( o de ails on he
cas e sys em, see Deshpande 2011).
15
This shi in indus ial dis ibu ion in u al India has been documen ed in se e al
o he s udies including Thomas 2015 and Jacoby and Dasgup a 2015.
16
Following he li e a u e on ea nings eg essions, we also es ima ed he eg essions
and decomposi ions wi hou he indus y and occupa ion con ols. The esul s a e
quali a i ely he same and a e a ailable om he au ho s on eques .
17
Deshpande e al. (2015) also ind a s icky loo o 1999/2000 and 2009/10 among
egula sala ied wo ke s in India.
18
The “O he s”g oup includes, bu is no con ined o, he Hindu uppe cas es as he
EUS da a do no allow us o isola e he Hindu uppe cas es. Consequen ly, his ou -
way di ision unde s a es he gaps be ween he Hindu uppe cas es and he mos ma -
ginalized ST and SC g oups (Deshpande 2011).
19
This inding o u al India is simila o he e idence p esen ed in Azam 2012a o
egula sala ied wo ke s in u ban India. Using condi ional quan ile eg essions on EUS
da a o 1983, 1993/94, and 2004/05, he inds ha e u ns o seconda y and e ia y
educa ion ha e inc eased o e ime and a e la ge a highe quan iles.
20
The esul s based on he o he coun e ac ual ha elies on he cha ac e is ics o
2011/12 and e u ns o 2004/05 a e e y simila and a e a ailable on eques .
21
We also implemen ed he agg ega e decomposi ion using Melly’s e inemen (Melly
2006) o he Machado-Ma a Decomposi ion (Machado and Ma a 2005) and ound simi-
la esul s.
22
S anda d e o s o Table 4 (and o all i s a ian s in a ious appendices) we e cal-
cula ed using 1000 eplica ions o he boo s ap p ocedu e ollowed by Fo in e al
(2011). The basic codes o his a e a ailable om Fo in’s websi e h p:// acul y.a -
s.ubc.ca/n o in/da ahead.h ml and we e sui ably modi ied o his pape .
23
We decided o p esen he decomposi ion wi h indus y and occupa ion con ols in
he main ex because as no ed ea lie he e was a massi e shi om ag icul u e o in-
dus y which we belie e was la gely exogenous o educa ion. Because his change has
been widely discussed in ela ed li e a u e on he Indian economy, we eel ha eade s
may be mo e in e es ed in he speci ica ion ha includes indus y and occupa ion con-
ols, despi e he endogenei y issue ha i su e s om.
24
We had o exclude con ols o s a e o esidence, as he e is no na u al c i e ia o
classi ying he s a es as high o low.
25
Ko wal e al. 2011, o all-India, 1983–2004/05; Jaya aj and Sub amanian 2015, o
u al and u ban sepa a ely, 2004/05–2009/10.
26
Using NSS da a on consump ion expendi u e om 1957 o 2012, Da e al. (2016)
p o ide di ec e idence ha g ow h in India has been accompanied wi h a decline in
po e y, especially a e economic e o ms we e ini ia ed in he ea ly 1990s.
27
The co esponding igu es o below po e y line popula ion in u ban India a e
13.7 % (53.1 million).
28
Acco ding o es ima es om he Wo ld Bank, he Gini alues o BRICS coun-
ies a e as ollows: B azil-0.539 (2009); Russia-0.397 (2009); India-0.339 (2009);
China-0.421 (2010), and Sou h A ica-0.630 (2008). These a e a ailable a Gini
Index (Wo ld Bank Es ima e) h p://da a.wo ldbank.o g/indica o /SI.POV.GINI.
Accessed on June 1, 2016.
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 19 o 26
Appendix 1
5.1 Re-es ima ing Table 4 wi hou con ols o indus y and occupa ion
Table 5 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12
No indus y and occupa ion con ols
90-10 50-10 90-50 Gini
Value in 2004/05 1.865*** 0.887*** 0.977*** 0.462***
(0.019) (0.017) (0.011) (0.002)
Value in 2011/12 1.575*** 0.791*** 0.784*** 0.396***
(0.017) (0.011) (0.015) (0.003)
To al change −0.290*** −0.096*** −0.194*** −0.066***
(0.025) (0.020) (0.019) (0.004)
Agg ega e decomposi ion o o al change
S uc u e e ec −0.406*** −0.105*** −0.301*** −0.095***
(0.027) (0.022) (0.019) (0.004)
Composi ion e ec 0.116*** 0.008 0.107*** 0.029***
(0.016) (0.006) (0.015) (0.002)
De ailed decomposi ion o he composi ion e ec
Educa ion 0.100*** 0.010*** 0.090*** 0.024***
(0.011) (0.003) (0.011) (0.002)
Expe ience 0.027*** 0.001 0.027*** 0.008***
(0.004) (0.003) (0.004) (0.001)
Male −0.017*** −0.013*** −0.005*** −0.005***
(0.003) (0.003) (0.002) (0.001)
S a es 0.003 0.009*** −0.006 0.002***
(0.004) (0.002) (0.004) (0.001)
Ma ied 0.003** 0.001 0.001* 0.001***
(0.001) (0.001) (0.001) (0.000)
Cas e −0.001 −0.001 −0.001 −0.001**
(0.002) (0.001) (0.001) (0.000)
Muslim 0.002 0.001 0.001 0.000
(0.001) (0.001) (0.001) (0.000)
De ailed decomposi ion o he s uc u e e ec
Educa ion −0.244*** −0.042 −0.203*** −0.030***
(0.034) (0.018) (0.030) (0.004)
Expe ience −0.360 −0.172 −0.188 0.033
(0.222) (0.174) (0.161) (0.034)
Male 0.055 −0.066 0.120*** −0.001
(0.052) (0.048) (0.027) (0.006)
S a es −0.085 0.074 −0.159*** −0.007
(0.074) (0.053) (0.053) (0.014)
Ma ied −0.105** 0.010 −0.116*** −0.011*
(0.044) (0.032) (0.034) (0.006)
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 20 o 26
Appendix 2
5.2 Sensi i i y checks o choice o omi ed ca ego ies
Table 5 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12 (Con inued)
Cas e 0.096 0.018 0.079 0.007
(0.061) (0.032) (0.051) (0.011)
Muslim 0.015* 0.004 0.011* 0.000
(0.008) (0.004) (0.007) (0.001)
Cons an 0.225 0.069 0.155 −0.087**
(0.257) (0.202) (0.188) (0.037)
Boo s ap s anda d e o s shown in pa en heses. Signi ican a *10 %, **5 %, and ***1 %. No e ha he i s panel o his
able does no exac ly ma ch ha o Table 4. This is because he o al numbe o obse a ions di e ac oss he wo
ables as indus y and occupa ion in o ma ion was missing o some indi iduals
Table 6 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12
Wi h college and beyond as omi ed (all else he same)
90-10 50-10 90-50 Gini
Value in 2004/05 1.857*** 0.880*** 0.977*** 0.461***
(0.021) (0.019) (0.011) (0.002)
Value in 2011/12 1.576*** 0.791*** 0.784*** 0.396***
(0.017) (0.011) (0.015) (0.003)
To al change −0.282*** −0.089*** −0.192*** −0.066***
(0.026) (0.021) (0.018) (0.004)
Agg ega e decomposi ion o o al change
S uc u e e ec −0.322*** −0.094*** −0.228*** −0.072***
(0.027) (0.024) (0.018) (0.003)
Composi ion e ec 0.041** 0.005 0.036*** 0.007***
(0.016) (0.009) (0.014) (0.003)
De ailed decomposi ion o he composi ion e ec
Educa ion 0.041*** 0.002 0.039*** 0.011***
(0.008) (0.004) (0.007) (0.001)
Indus y −0.018** 0.002 −0.020*** −0.009***
(0.008) (0.005) (0.008) (0.001)
Expe ience 0.017*** 0.000 0.017*** 0.005***
(0.004) (0.003) (0.003) (0.001)
Male −0.014*** −0.012*** −0.002 −0.004***
(0.003) (0.003) (0.002) (0.001)
Occupa ion 0.012*** 0.002** 0.010*** 0.003***
(0.004) (0.001) (0.004) (0.001)
S a es 0.001 0.009*** −0.009 0.002**
(0.015) (0.002) (0.014) (0.001)
Ma ied 0.002* 0.001 0.001 0.001***
(0.001) (0.001) (0.001) (0.000)
Cas e −0.002 −0.001 −0.001 −0.001***
(0.001) (0.001) (0.001) (0.000)
Muslim 0.002 0.001 0.001 0.000
(0.001) (0.001) (0.001) (0.000)
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 21 o 26
Table 6 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12 (Con inued)
De ailed decomposi ion o he s uc u e e ec
Educa ion 0.497*** 0.086 0.411** 0.098***
(0.192) (0.055) (0.185) (0.035)
Indus y −0.006 −0.061*** 0.055** 0.009*
(0.028) (0.017) (0.024) (0.005)
Expe ience −0.313 −0.185 −0.128 0.025
(0.223) (0.173) (0.156) (0.033)
Male 0.084 −0.051 0.135*** 0.005
(0.053) (0.050) (0.028) (0.006)
Occupa ion −0.088*** 0.008 −0.096*** −0.012***
(0.028) (0.023) (0.026) (0.004)
S a es −0.01 0.085 −0.094** 0.014
(0.069) (0.052) (0.048) (0.013)
Ma ied −0.103** 0.013 −0.116*** −0.009
(0.043) (0.032) (0.032) (0.006)
Cas e 0.064 0.012 0.052 0.005
(0.056) (0.030) (0.047) (0.011)
Muslim 0.013 0.004 0.010 0.000
(0.01) (0.005) (0.011) (0.001)
Cons an −0.461 −0.004 −0.456* −0.208***
(0.307) (0.206) (0.235) (0.052)
Boo s ap s anda d e o s shown in pa en heses. Signi ican a *10 %, **5 %, and ***1 %
Table 7 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12
All ca ego ical a iables con e ed o dummy a iables, excluded s a es as con ols
90-10 50-10 90-50 Gini
Value in 2004/05 1.857*** 0.880*** 0.977*** 0.461***
(0.021) (0.019) (0.011) (0.002)
Value in 2011/12 1.576*** 0.791*** 0.784*** 0.396***
(0.017) (0.010) (0.015) (0.003)
To al change −0.282*** −0.089*** −0.192*** −0.066***
(0.027) (0.022) (0.019) (0.004)
Agg ega e decomposi ion o o al change
S uc u e e ec −0.382*** −0.092*** −0.290*** −0.082***
(0.028) (0.024) (0.019) (0.005)
Composi ion e ec 0.101*** 0.003 0.098*** 0.017***
(0.015) (0.007) (0.013) (0.002)
De ailed decomposi ion o he composi ion e ec
Educa ion 0.046*** 0.000 0.047*** 0.010***
(0.006) (0.003) (0.005) (0.001)
Indus y 0.026*** 0.009** 0.017*** 0.001
(0.006) (0.004) (0.005) (0.001)
Expe ience 0.039*** 0.001 0.038*** 0.009***
(0.005) (0.003) (0.004) (0.001)
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 22 o 26
Appendix 3
5.3 Robus ness check using s a e-le el po e y lines as de la o s
Table 7 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12 (Con inued)
Male −0.023*** −0.011*** −0.011*** −0.006***
(0.004) (0.003) (0.002) (0.001)
Occupa ion 0.015*** 0.002** 0.012*** 0.003***
(0.005) (0.001) (0.004) (0.001)
Ma ied 0.001 0.001 0.000 0.001***
(0.001) (0.001) (0.001) (0.000)
Cas e −0.002* 0.000 −0.002* −0.001*
(0.001) (0.000) (0.001) (0.000)
Muslim −0.001 0.001 −0.002* −0.001***
(0.001) (0.001) (0.001) (0.000)
De ailed decomposi ion o he s uc u e e ec
Educa ion −0.133*** −0.040** −0.093*** −0.016***
(0.030) (0.017) (0.026) (0.003)
Indus y −0.060** −0.057*** −0.003 −0.002
(0.024) (0.016) (0.021) (0.003)
Expe ience −0.391 −0.189 −0.202 0.022
(0.242) (0.173) (0.190) (0.036)
Male 0.066 −0.044 0.110*** 0.007
(0.054) (0.051) (0.026) (0.005)
Occupa ion −0.042 0.005 −0.047* 0.001
(0.028) (0.011) (0.026) (0.004)
Ma ied −0.160*** 0.005 −0.165*** −0.023***
(0.045) (0.032) (0.035) (0.006)
Cas e 0.127** 0.013 0.114** 0.006
(0.063) (0.028) (0.056) (0.012)
Muslim 0.016** 0.003 0.012** 0.002*
(0.007) (0.004) (0.006) (0.001)
Cons an 0.196 0.211 −0.015 −0.079**
(0.287) (0.203) (0.223) (0.038)
Boo s ap s anda d e o s shown in pa en heses. Signi ican a *10 %, **5 %, and ***1 %
Table 8 Inequali y measu es o eal weekly ea nings om paid wo k
Using s a e po e y lines
2004/05 2011/12
25-10 1.52 1.52
60-40 1.39 1.27
90-75 1.70 1.50
Va iance o log ea nings 0.59 0.46
Gini 0.452 0.387
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 23 o 26
Table 9 Decomposi ion o changes in inequali y measu es om 2004/05 o 2011/12
Using s a e po e y lines as de la o s
90-10 50-10 90-50 Gini
Value in 2004/05 1.797*** 0.864*** 0.933*** 0.451***
(0.015) (0.010) (0.012) (0.002)
Value in 2011/12 1.515*** 0.780*** 0.735*** 0.387***
(0.015) (0.012) (0.011) (0.003)
To al change −0.282*** −0.084*** −0.198*** −0.065***
(0.021) (0.015) (0.016) (0.004)
Agg ega e decomposi ion o o al change
S uc u e e ec −0.306*** −0.082*** −0.223*** −0.073***
(0.021) (0.018) (0.015) (0.004)
Composi ion e ec 0.024* −0.001 0.025** 0.009***
(0.014) (0.009) (0.012) (0.003)
De ailed decomposi ion o he composi ion e ec
Educa ion 0.036*** 0.003 0.033*** 0.012***
(0.007) (0.004) (0.006) (0.001)
Indus y −0.018** 0.002 −0.020*** −0.008***
(0.007) (0.004) (0.007) (0.001)
Expe ience 0.014*** −0.001 0.016*** 0.005***
(0.003) (0.003) (0.003) (0.001)
Male −0.021*** −0.016*** −0.006*** −0.004***
(0.004) (0.003) (0.001) (0.001)
Occupa ion 0.009*** 0.001 0.009*** 0.003***
(0.003) (0.001) (0.003) (0.001)
S a es 0.002 0.009*** −0.006 0.002
(0.015) (0.003) (0.014) (0.001)
Ma ied 0.002** 0.002** 0.001 0.001***
(0.001) (0.001) (0.001) (0.000)
Cas e −0.003* −0.001 −0.001 −0.001***
(0.001) (0.001) (0.001) (0.000)
Muslim 0.002 0.001 0.001 0.000
(0.001) (0.001) (0.001) (0.000)
De ailed decomposi ion o he s uc u e e ec
Educa ion −0.166*** −0.023 −0.143*** −0.016***
(0.033) (0.030) (0.046) (0.004)
Indus y −0.045* −0.050*** 0.005 0.008*
(0.027) (0.016) (0.023) (0.004)
Expe ience −0.411* −0.175 −0.236 0.021
(0.213) (0.169) (0.148) (0.034)
Male −0.047 −0.115*** 0.068*** −0.001
(0.044) (0.042) (0.026) (0.006)
Occupa ion −0.144*** −0.003 −0.141*** −0.012***
(0.028) (0.023) (0.026) (0.004)
S a es −0.164** −0.146** −0.018 0.013
(0.070) (0.059) (0.047) (0.014)
Khanna e al. IZA Jou nal o Labo & De elopmen (2016) 5:18 Page 24 o 26
