Appendix 1: Description of Variables Used in the Estimation

Appendices

Appendix 1: Description of Variables used in the Estimation

Variable / Description / Base category
Dependent Variables
Log Hourly Wage (Explained variable in the wage equation) / Natural logarithm of hourly wages in rupees. One rupee equals to 0.013 Euro or 0.017 US Dollar (approximately). / None
Work Participation (Explained variable in the selection equation) / If an individual works more than or equal to 240 hours in a year, he/she is considered as part of the workforce. a / If an individual works less than 240 hours in a year.
Independent Variables
Human Capital Variables
Educational Level
(5 dummies: Primary, Middle, Secondary, Higher Secondary, and Graduate) / An individual belongs to one of the following educational level: Illiterate (includes literate with below primary also), Primary, Middle, Secondary, Higher Secondary, and Graduate. It is assumed that an individual spends 0, 5, 3, 2, 2 and 3 additional years, respectively in these educational levels. / Illiterate (and literate with below Primary)
Experience / Potential experience (proxy for the actual labour market experience) in years, defined as: Age-Years of schooling-5.b / None
Experience squared / Square of Experience / None
Demographic Variables
Gender / Sex of individual: Male or Female / Male
Sector / Place of residence: Rural or Urban / Rural
Marital Status / Marital Status of individual: Never married (unmarried), and Married (the latter also includes Divorced, Widowed and others) / Never married
Social Group
(3 dummies: SC, ST and OBC) / Each household belong to one of the following social groups: Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Others. / Others
Family Background Variable
Household Head’s Education
(4 dummies: Head-Primary, Head-Middle, Head-Secondary, and Head- Graduate) / Education of household head, which is grouped as Illiterate (and literate with below primary), Primary, Middle, Secondary and Higher Secondary, and Graduate.c / Head-Illiterate (and literate with below Primary)
Exclusion Restrictions
Household Size / Number of members in a household / None
Number of Children / Number of children (aged 0-14) in a household / None
Agriculture Land
(3 dummies: >0 to ≤4, >4 to ≤15, and >15 / Total agriculture land (in acre) possess by a household. One acre equals 4046.87 square meters. This variable is used only in the rural sector analysis. / Household does not have agriculture land.
Non-labor Income
(3 dummies: >0 to ≤2500, >2500 to ≤8000, and >8000 / Non-labor income (in rupees) includes income from renting property and/or income from interest, dividends, or capital gains. This variable is used only in the urban sector analysis. / Household does not have non-labor income.

Notes: Description of variables is based on IHDS (2005) data. a The criterion for selection of 240 hours in a year is based on work participation measure used in the IHDS data. b It is assumed that an individual starts schooling at the age of five and starts working immediately after schooling. c In case, the household head is an observation his/her father’s education is used.

Appendix 2: Selectivity-corrected Estimates of the Wage Equation for Different Subgroups: Rural

Variables / All / NSC / SC/ST
Male / Female / Male / Female / Male / Female
Wage Equation
Education (Ref: Illiterate & below primary):
Primary / 0.118*** / 0.035* / 0.108*** / 0.021 / 0.122*** / 0.047*
(0.010) / (0.016) / (0.015) / (0.021) / (0.015) / (0.023)
Middle / 0.237*** / 0.115*** / 0.249*** / 0.102*** / 0.218*** / 0.125***
(0.011) / (0.019) / (0.016) / (0.026) / (0.016) / (0.030)
Secondary / 0.377*** / 0.234*** / 0.400*** / 0.209*** / 0.336*** / 0.268***
(0.012) / (0.024) / (0.016) / (0.032) / (0.018) / (0.038)
Higher secondary / 0.572*** / 0.598*** / 0.607*** / 0.638*** / 0.508*** / 0.524***
(0.017) / (0.037) / (0.023) / (0.048) / (0.026) / (0.062)
Graduate / 1.013*** / 0.835*** / 1.074*** / 0.793*** / 0.883*** / 0.938***
(0.019) / (0.043) / (0.024) / (0.051) / (0.034) / (0.086)
Experience / 0.034*** / 0.021*** / 0.042*** / 0.025*** / 0.024*** / 0.018***
(0.002) / (0.003) / (0.003) / (0.003) / (0.003) / (0.004)
Experience squared / -0.000*** / -0.000*** / -0.001*** / -0.000*** / -0.000*** / -0.000***
(0.000) / (0.000) / (0.000) / (0.000) / (0.000) / (0.000)
Marital Status (Ref: Unmarried):
Married / -0.007 / -0.020 / 0.025 / -0.055* / -0.046 / 0.014
(0.017) / (0.017) / (0.023) / (0.024) / (0.026) / (0.025)
Social Group (Ref: Others):
OBC / -0.040*** / 0.000 / - / - / - / -
(0.010) / (0.016) / - / - / - / -
SC / -0.071*** / 0.023 / - / - / - / -
(0.011) / (0.018) / - / - / - / -
ST / -0.142*** / 0.016 / - / - / - / -
(0.014) / (0.021) / - / - / - / -
Household Head's Education (Ref: Illiterate & below primary):
Primary / 0.031** / -0.010 / 0.026 / -0.009 / 0.034* / -0.009
(0.010) / (0.012) / (0.014) / (0.017) / (0.015) / (0.018)
Middle / 0.058*** / -0.013 / 0.039* / -0.010 / 0.094*** / -0.021
(0.015) / (0.016) / (0.019) / (0.021) / (0.025) / (0.023)
Secondary & higher secondary / 0.081*** / 0.015 / 0.063** / 0.006 / 0.113*** / 0.020
(0.017) / (0.018) / (0.020) / (0.025) / (0.030) / (0.027)
Graduate / 0.201*** / 0.371*** / 0.185*** / 0.432*** / 0.161* / 0.253***
(0.039) / (0.043) / (0.047) / (0.056) / (0.076) / (0.068)
Intercept / 1.907*** / 1.329*** / 1.718*** / 1.244*** / 2.184*** / 1.883***
(0.053) / (0.115) / (0.066) / (0.128) / (0.103) / (0.327)
Participation Equation
Education (Ref: Illiterate & below primary):
Primary / -0.080* / -0.226*** / -0.166*** / -0.310*** / 0.096 / -0.075
(0.032) / (0.030) / (0.041) / (0.038) / (0.054) / (0.052)
Middle / -0.094** / -0.231*** / -0.109** / -0.341*** / -0.019 / -0.035
(0.033) / (0.035) / (0.042) / (0.042) / (0.056) / (0.062)
Secondary / -0.138*** / -0.199*** / -0.188*** / -0.307*** / 0.000 / -0.018
(0.034) / (0.040) / (0.042) / (0.049) / (0.060) / (0.072)
Higher secondary / -0.202*** / 0.017 / -0.259*** / -0.134 / -0.044 / 0.307**
(0.043) / (0.059) / (0.052) / (0.071) / (0.079) / (0.108)
Graduate / 0.019 / 0.511*** / 0.005 / 0.410*** / 0.014 / 0.457**
(0.050) / (0.068) / (0.059) / (0.078) / (0.096) / (0.151)
Experience / 0.124*** / 0.116*** / 0.123*** / 0.105*** / 0.131*** / 0.137***
(0.003) / (0.003) / (0.004) / (0.004) / (0.005) / (0.005)
Experience squared / -0.002*** / -0.002*** / -0.002*** / -0.002*** / -0.002*** / -0.002***
(0.000) / (0.000) / (0.000) / (0.000) / (0.000) / (0.000)
Marital Status (Ref: Unmarried):
Married / 0.870*** / -0.014 / 0.856*** / -0.009 / 0.896*** / -0.037
(0.031) / (0.031) / (0.038) / (0.038) / (0.053) / (0.051)
Social Group (Ref: Others):
OBC / 0.094*** / 0.248*** / - / - / - / -
(0.026) / (0.027) / - / - / - / -
SC / 0.248*** / 0.475*** / - / - / - / -
(0.028) / (0.029) / - / - / - / -
ST / 0.312*** / 0.742*** / - / - / - / -
(0.039) / (0.037) / - / - / - / -
Household Head's Education (Ref: Illiterate & below primary):
Primary / -0.122*** / -0.203*** / -0.142*** / -0.207*** / -0.062 / -0.198***
(0.026) / (0.025) / (0.032) / (0.031) / (0.047) / (0.041)
Middle / -0.225*** / -0.327*** / -0.215*** / -0.345*** / -0.250*** / -0.335***
(0.034) / (0.030) / (0.040) / (0.037) / (0.063) / (0.050)
Secondary & higher secondary / -0.357*** / -0.548*** / -0.334*** / -0.596*** / -0.472*** / -0.494***
(0.033) / (0.030) / (0.039) / (0.037) / (0.066) / (0.052)
Graduate / -0.524*** / -0.736*** / -0.483*** / -0.800*** / -0.655*** / -0.641***
(0.072) / (0.063) / (0.082) / (0.075) / (0.158) / (0.118)
Household Size / -0.078*** / -0.117*** / -0.080*** / -0.119*** / -0.075*** / -0.113***
(0.005) / (0.005) / (0.006) / (0.007) / (0.010) / (0.009)
No. of children / 0.081*** / 0.113*** / 0.092*** / 0.116*** / 0.054** / 0.110***
(0.009) / (0.009) / (0.012) / (0.011) / (0.016) / (0.014)
Agriculture land in acre (Ref: No land):
>0 & <=4 acre / -0.075*** / 0.177*** / -0.115*** / 0.117*** / 0.017 / 0.281***
(0.022) / (0.021) / (0.027) / (0.026) / (0.038) / (0.034)
>4 & <=15 acre / -0.368*** / -0.248*** / -0.449*** / -0.340*** / -0.157* / -0.032
(0.035) / (0.035) / (0.041) / (0.042) / (0.069) / (0.066)
>15 acre / -0.657*** / -0.803*** / -0.900*** / -0.942*** / 0.086 / -0.388
(0.079) / (0.093) / (0.090) / (0.105) / (0.195) / (0.206)
Intercept / -0.587*** / -1.910*** / -0.439*** / -1.477*** / -0.951*** / -2.602***
(0.080) / (0.122) / (0.090) / (0.133) / (0.205) / (0.352)
Mills lambda / 0.035 / 0.132*** / 0.122** / 0.140*** / -0.088 / 0.127**
(0.033) / (0.027) / (0.042) / (0.035) / (0.054) / (0.046)
Wald Chi2 / 14867.54 / 3697.80 / 8167.63 / 2200.44 / 6214.04 / 1587.18
No. of observations / 30071 / 28172 / 18472 / 18235 / 11599 / 9937

Notes: *, **, *** indicate significance levels at 10, 5 and 1 percent, respectively; and standard errors are in parentheses. Dependent variable is the natural logarithm of hourly wage. ‘NSC’ denotes non-scheduled castes group (other backward classes and others), and ‘SC/ST’ denotes scheduled castes group (scheduled castes and scheduled tribes).

Appendix 3: Selectivity-corrected Estimates of the Wage Equation for Different Subgroups: Urban

Variables / All / NSC / SC/ST
Male / Female / Male / Female / Male / Female
Wage Equation
Education (Ref: Illiterate & below primary):
Primary / 0.162*** / 0.154** / 0.143*** / 0.128* / 0.220*** / 0.254**
(0.021) / (0.047) / (0.025) / (0.057) / (0.037) / (0.084)
Middle / 0.334*** / 0.307*** / 0.318*** / 0.268*** / 0.387*** / 0.432***
(0.021) / (0.050) / (0.025) / (0.061) / (0.037) / (0.086)
Secondary / 0.558*** / 0.596*** / 0.544*** / 0.599*** / 0.623*** / 0.642***
(0.021) / (0.057) / (0.025) / (0.067) / (0.037) / (0.108)
Higher secondary / 0.819*** / 1.028*** / 0.812*** / 1.042*** / 0.872*** / 0.919***
(0.025) / (0.061) / (0.030) / (0.071) / (0.048) / (0.121)
Graduate / 1.249*** / 1.432*** / 1.242*** / 1.407*** / 1.332*** / 1.399***
(0.023) / (0.080) / (0.026) / (0.096) / (0.047) / (0.148)
Experience / 0.045*** / 0.049*** / 0.041*** / 0.049*** / 0.065*** / 0.049***
(0.004) / (0.008) / (0.005) / (0.010) / (0.008) / (0.013)
Experience squared / -0.000*** / -0.001*** / -0.000*** / -0.001*** / -0.001*** / -0.001**
(0.000) / (0.000) / (0.000) / (0.000) / (0.000) / (0.000)
Marital Status (Ref: Unmarried):
Married / 0.027 / -0.090 / 0.019 / -0.134* / 0.090 / -0.014
(0.029) / (0.050) / (0.034) / (0.062) / (0.056) / (0.087)
Social Group (Ref: Others):
OBC / -0.080*** / -0.049 / - / - / - / -
(0.014) / (0.035) / - / - / - / -
SC / -0.029 / 0.053 / - / - / - / -
(0.016) / (0.044) / - / - / - / -
ST / -0.093** / 0.019 / - / - / - / -
(0.033) / (0.075) / - / - / - / -
Household Head's Education (Ref: Illiterate & below primary):
Primary / 0.060*** / -0.037 / 0.039* / -0.055 / 0.134*** / 0.037
(0.016) / (0.042) / (0.018) / (0.052) / (0.031) / (0.070)
Middle / 0.097*** / 0.034 / 0.089*** / 0.083 / 0.149*** / -0.069
(0.018) / (0.054) / (0.021) / (0.067) / (0.039) / (0.090)
Secondary & higher secondary / 0.165*** / 0.181** / 0.171*** / 0.254** / 0.168*** / 0.058
(0.018) / (0.061) / (0.021) / (0.078) / (0.038) / (0.097)
Graduate / 0.321*** / 0.453*** / 0.330*** / 0.530*** / 0.322*** / 0.254
(0.029) / (0.072) / (0.031) / (0.088) / (0.084) / (0.139)
Intercept / 1.619*** / 1.175*** / 1.692*** / 1.237*** / 1.134*** / 1.586***
(0.079) / (0.231) / (0.089) / (0.279) / (0.183) / (0.412)
Participation Equation
Education (Ref: Illiterate & below primary):
Primary / -0.137** / -0.172*** / -0.119* / -0.154** / -0.077 / -0.193*
(0.049) / (0.042) / (0.058) / (0.049) / (0.099) / (0.084)
Middle / -0.314*** / -0.197*** / -0.316*** / -0.231*** / -0.205* / -0.060
(0.046) / (0.042) / (0.053) / (0.049) / (0.094) / (0.089)
Secondary / -0.400*** / -0.207*** / -0.446*** / -0.237*** / -0.122 / -0.116
(0.045) / (0.045) / (0.052) / (0.051) / (0.095) / (0.101)
Higher secondary / -0.424*** / 0.211*** / -0.455*** / 0.163** / -0.223* / 0.347**
(0.051) / (0.055) / (0.058) / (0.061) / (0.113) / (0.127)
Graduate / -0.116* / 0.816*** / -0.157** / 0.728*** / 0.110 / 1.041***
(0.051) / (0.054) / (0.058) / (0.060) / (0.122) / (0.130)
Experience / 0.141*** / 0.086*** / 0.139*** / 0.082*** / 0.158*** / 0.109***
(0.003) / (0.004) / (0.004) / (0.004) / (0.008) / (0.008)
Experience squared / -0.003*** / -0.001*** / -0.003*** / -0.001*** / -0.003*** / -0.001***
(0.000) / (0.000) / (0.000) / (0.000) / (0.000) / (0.000)
Marital Status (Ref: Unmarried):
Married / 0.914*** / -0.378*** / 0.924*** / -0.371*** / 0.867*** / -0.469***
(0.037) / (0.042) / (0.042) / (0.047) / (0.079) / (0.093)
Social Group (Ref: Others):
OBC / 0.061* / 0.117*** / - / - / - / -
(0.028) / (0.030) / - / - / - / -
SC / 0.126*** / 0.297*** / - / - / - / -
(0.034) / (0.035) / - / - / - / -
ST / 0.152* / 0.452*** / - / - / - / -
(0.072) / (0.067) / - / - / - / -
Household Head's Education (Ref: Illiterate & below primary):
Primary / -0.146*** / -0.214*** / -0.135*** / -0.212*** / -0.190* / -0.229**
(0.035) / (0.038) / (0.039) / (0.045) / (0.075) / (0.074)
Middle / -0.180*** / -0.442*** / -0.179*** / -0.434*** / -0.164 / -0.485***
(0.037) / (0.039) / (0.041) / (0.046) / (0.084) / (0.078)
Secondary & higher secondary / -0.281*** / -0.624*** / -0.279*** / -0.630*** / -0.315*** / -0.650***
(0.034) / (0.036) / (0.038) / (0.043) / (0.077) / (0.073)
Graduate / -0.505*** / -0.688*** / -0.509*** / -0.677*** / -0.597*** / -0.838***
(0.047) / (0.048) / (0.051) / (0.053) / (0.138) / (0.115)
Household Size / -0.086*** / -0.093*** / -0.081*** / -0.081*** / -0.112*** / -0.125***
(0.006) / (0.007) / (0.007) / (0.008) / (0.015) / (0.016)
No. of children / 0.093*** / 0.080*** / 0.086*** / 0.057*** / 0.127*** / 0.153***
(0.012) / (0.012) / (0.013) / (0.014) / (0.027) / (0.025)
Non-labor income in rupees (Ref: No non-labor income)
>0 & <= 2500 rupees / -0.091 / -0.009 / -0.092 / -0.058 / -0.145 / 0.221
(0.088) / (0.093) / (0.096) / (0.107) / (0.219) / (0.200)
>2500 & <= 8000 rupees / -0.168* / -0.075 / -0.231** / -0.027 / 0.171 / -0.371
(0.082) / (0.092) / (0.088) / (0.098) / (0.231) / (0.274)
>8000 rupees / -0.565*** / -0.259*** / -0.588*** / -0.226*** / -0.363* / -0.423*
(0.054) / (0.062) / (0.058) / (0.066) / (0.157) / (0.179)
Intercept / -0.429*** / -1.253*** / -0.355*** / -1.142*** / -0.850*** / -1.435***
(0.086) / (0.099) / (0.092) / (0.106) / (0.243) / (0.279)
Mills lambda / -0.115* / 0.026 / -0.150** / -0.027 / 0.087 / 0.052
(0.051) / (0.098) / (0.058) / (0.127) / (0.097) / (0.145)
Wald Chi2 / 9216.31 / 3183.69 / 6813.37 / 2446.91 / 2254.28 / 829.69
No. of observations / 19465 / 22099 / 15275 / 17754 / 4190 / 4345

Appendix 4: Decomposition of Gender Wage Differential: Blinder-Oaxaca Decomposition

Components / Rural / Urban
ALL / NSC / SC/ST / ALL / NSC / SC/ST
Prediction (Male) / 2.091 / 2.166 / 1.986 / 2.748 / 2.783 / 2.631
(0.004) / (0.006) / (0.006) / (0.007) / (0.008) / (0.015)
Prediction(Female) / 1.509 / 1.526 / 1.491 / 2.244 / 2.284 / 2.145
(0.005) / (0.008) / (0.007) / (0.018) / (0.022) / (0.032)
Raw differential / 0.582 / 0.640 / 0.495 / 0.504 / 0.499 / 0.486
(0.007) / (0.010) / (0.010) / (0.020) / (0.024) / (0.035)
Using Males Wage Structure:
Explained differential / 0.227 / 0.245 / 0.180 / 0.103 / 0.084 / 0.113
(0.006) / (0.008) / (0.008) / (0.013) / (0.015) / (0.024)
Unexplained differential / 0.355 / 0.395 / 0.315 / 0.401 / 0.415 / 0.373
(0.007) / (0.010) / (0.010) / (0.016) / (0.018) / (0.029)
Proportion of explained differential / 0.390 / 0.383 / 0.364 / 0.205 / 0.168 / 0.232
Proportion of unexplained differential / 0.610 / 0.617 / 0.636 / 0.795 / 0.832 / 0.768
Using Females Wage Structure:
Explained differential / 0.231 / 0.249 / 0.169 / 0.085 / 0.074 / 0.063
(0.011) / (0.016) / (0.016) / (0.020) / (0.023) / (0.045)
Unexplained differential / 0.351 / 0.391 / 0.326 / 0.419 / 0.425 / 0.423
(0.012) / (0.017) / (0.017) / (0.024) / (0.028) / (0.050)
Proportion of explained differential / 0.397 / 0.390 / 0.342 / 0.169 / 0.147 / 0.130
Proportion of unexplained differential / 0.603 / 0.610 / 0.658 / 0.831 / 0.853 / 0.870
Observations / 31875 / 17905 / 13970 / 15090 / 11484 / 3606

Notes: ‘NSC’ denotes non-scheduled Castes group (other backward classes and others), and ‘SC/ST’ denotes scheduled castes group (scheduled castes and scheduled tribes). Standard errors are in parentheses.

Appendix 5: Decomposition of Social Groups Wage Differential: Blinder-Oaxaca Decomposition

Components / Rural / Urban
Prediction (NSC) / 1.981 / 2.695
(0.005) / (0.008)
Prediction(SC/ST) / 1.815 / 2.520
(0.005 / (0.014)
Raw differential / 0.166 / 0.174
(0.007 / (0.016)
Using NSC Wage Structure:
Explained differential / 0.129 / 0.211
(0.006) / (0.012)
Unexplained differential / 0.037 / -0.036
(0.006) / (0.013)
Proportion of explained differential / 0.775 / 1.208
Proportion of unexplained differential / 0.225 / -0.208
Using SC/ST Wage Structure:
Explained differential / 0.138 / 0.229
(0.008) / (0.017)
Unexplained differential / 0.028 / -0.055
(0.008 / (0.019)
Proportion of explained differential / 0.832 / 1.316
Proportion of unexplained differential / 0.168 / -0.316
Observations / 31875 / 15090

Notes: ‘NSC’ denotes non-scheduled castes group (other backward classes and others), and ‘SC/ST’ denotes scheduled castes group (scheduled castes and scheduled tribes). Standard errors are in parentheses.