IDEAS home Printed from https://ideas.repec.org/a/sae/soudev/v14y2019i3p257-280.html
   My bibliography  Save this article

Wages in Imperfect Markets: A Post-reforms Study of Indian Manufacturing

Author

Listed:
  • Ashish Kumar Sedai

Abstract

This study analyzes the effects of structural market imperfections on wage growth in the Indian manufacturing following concerns over wage inequality post economic reforms, 1991. Using firm-level sales, expenditure, and wage data, we construct indices for market concentration, mark-up, and wage growth for 22 three-digit manufacturing industries for the period 1999–2016. Preliminary observations show falling wage shares in 18 industries, a rising level of concentration in all the industries and a fluctuating mark-up across the period confirming the results of other empirical studies. A panel regression shows that the impact of imperfect markets on wage growth is dialectical: an increase in market concentration has a positive effect on wage growth, whereas an increase in mark-up has a negative effect. The study finds that having fewer firms in a market is more beneficial for wage growth, given that there are prudential regulations to check monopoly behaviour. The study recommends that the Competition Commission of India incorporates these wage concerns when deciding to prohibit the abuse of dominant positions.

Suggested Citation

  • Ashish Kumar Sedai, 2019. "Wages in Imperfect Markets: A Post-reforms Study of Indian Manufacturing," Journal of South Asian Development, , vol. 14(3), pages 257-280, December.
    • Handle: RePEc:sae:soudev:v:14:y:2019:i:3:p:257-280
    DOI: 10.1177/0973174119890718
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0973174119890718
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0973174119890718?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pal, Rupayan & Rathore, Udayan, 2016. "Estimating workers’ bargaining power and firms’ markup in India: Implications of reforms and labour regulations," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1118-1135.
    2. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 879-907.
    3. Booth, Alison L., 2014. "Wage determination and imperfect competition," Labour Economics, Elsevier, vol. 30(C), pages 53-58.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    5. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 91-134.
    6. Suma Athreye & Sandeep Kapur, 2006. "Industrial concentration in a liberalising economy: A study of Indian manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 42(6), pages 981-999.
    7. Bai, Chong-En & Mao, Jie & Zhang, Qiong, 2014. "Measuring market concentration in China: the problem with using censored data and its rectification," China Economic Review, Elsevier, vol. 30(C), pages 432-447.
    8. repec:zbw:bofrdp:2011_012 is not listed on IDEAS
    9. Abieyuwa Ohonba & Johannes W. Fedderke, 2013. "Competition, Industrial structure and Economic Growth," Working Papers 330, Economic Research Southern Africa.
    10. Pant, Manoj & Pattanayak, Manoranjan, 2005. "Does Openness Promote Competition? A Case Study of Indian Manufacturing," MPRA Paper 2871, University Library of Munich, Germany.
    11. Johannes Fedderke & Charles Simkins, 2012. "Economic Growth in South Africa," Economic History of Developing Regions, Taylor & Francis Journals, vol. 27(1), pages 176-208.
    12. Haworth, Charles T & Reuther, Carol Jean, 1978. "Industrial Concentration and Interindustry Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 85-95, February.
    13. Kambhampati, Uma S. & Kattuman, Paul A., 2009. "Growth responses to competitive shocks: Market structure dynamics under liberalisation," Structural Change and Economic Dynamics, Elsevier, vol. 20(2), pages 114-125, June.
    14. Thomas I. Palley, 2014. "A neo-Kaleckian–Goodwin model of capitalist economic growth: monopoly power, managerial pay and labour market conflict," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(6), pages 1355-1372.
    15. Badi Baltagi & Seuck Song, 2006. "Unbalanced panel data: A survey," Statistical Papers, Springer, vol. 47(4), pages 493-523, October.
    16. Paul Geroski & Paul Gregg & John van Reenen, 1995. "Market Imperfections and Employment," OECD Jobs Study Working Papers 5, OECD Publishing.
    17. Lawrence F. Katz & Lawrence H. Summers, 1989. "Industry Rents: Evidence and Implications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1989 Micr), pages 209-290.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Agenor,Pierre-Richard, 2003. "The mini-integrated macroeconomic model for poverty analysis : a framework for analyzing the unemployment and poverty effects of fiscal and labor market reforms," Policy Research Working Paper Series 3067, The World Bank.
    2. Zhiqi Chen & Bo Zhao, 2014. "Unemployment and product market competition in a Cournot model with efficiency wages," Canadian Journal of Economics, Canadian Economics Association, vol. 47(2), pages 555-579, May.
    3. Feldmann, Horst, 2012. "Banking deregulation around the world, 1970s to 2000s: The impact on unemployment," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 26-42.
    4. Philippe Aghion & Robin Burgess & Stephen J. Redding & Fabrizio Zilibotti, 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," American Economic Review, American Economic Association, vol. 98(4), pages 1397-1412, September.
    5. Sabien Dobbelaere & Jacques Mairesse, 2010. "Comparing Micro-evidence on Rent Sharing from Three Different Approaches," NBER Working Papers 16220, National Bureau of Economic Research, Inc.
    6. Mitton, Todd, 2008. "Institutions and concentration," Journal of Development Economics, Elsevier, vol. 86(2), pages 367-394, June.
    7. Horst Feldmann, 2013. "Exchange Rate Regimes and Unemployment," Open Economies Review, Springer, vol. 24(3), pages 537-553, July.
    8. Crescioli, Tommaso, 2024. "Reinforcing each other: How the combination of European and domestic reforms increased competition in liberalized industries," European Journal of Political Economy, Elsevier, vol. 83(C).
    9. Krishna Chaitanya Vadlamannati & Artur Tamazian, 2017. "Are Left-Wing Governments Really Pro-Labor? An Empirical Investigation for Latin America," Kyklos, Wiley Blackwell, vol. 70(1), pages 129-160, February.
    10. Peretto, Pietro F., 2021. "The employment and output of Nations: Theory and policy implications," Economic Modelling, Elsevier, vol. 103(C).
    11. Mozambique Ministry of Planning and Development & World Bank, 2006. "Job Creation in Mozambique : Is Labor Law Reform the Answer?," World Bank Publications - Reports 12807, The World Bank Group.
    12. H Buscher & C Dreger & R Ramos & J Surinach, 2009. "The Impact of Institutions on the Employment Performance in European Labour Markets," Economic Issues Journal Articles, Economic Issues, vol. 14(1), pages 17-34, March.
    13. Russo Francesco Flaviano, 2018. "Informality: the Doorstep of the Legal System," Open Economics, De Gruyter, vol. 1(1), pages 49-70, June.
    14. Adegboye Abidemi C. & Alao-Owunna Ifeoluwa & Bank-Ola Folake R., 2022. "Macroeconomic Shocks and Employment in sub-Sharan Africa: Do Labour Market Institutions Matter?," Zagreb International Review of Economics and Business, Sciendo, vol. 25(2), pages 97-118.
    15. Italo Colantone, 2012. "Trade openness, real exchange rates and job reallocation: evidence from Belgium," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 669-706, December.
    16. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2008. "Wages, Unemployment and Inequality with Heterogeneous Firms and Workers," NBER Working Papers 14122, National Bureau of Economic Research, Inc.
    17. Selçuk GÜL, 2013. "Institutional Rigidities and Their Effects on Labor Demand in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 20(20).
    18. Li-Hsuan Huang & Hsin-Yi Huang, 2017. "Real Wage Stagnancy: Evidence From Taiwan," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(02), pages 485-506, April.
    19. Abrevaya, Jason, 2019. "Missing dependent variables in fixed-effects models," Journal of Econometrics, Elsevier, vol. 211(1), pages 151-165.
    20. SHARMA Anand, 2017. "Dynamic Externalities And Regional Manufacturing Growth: Evidence From India," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(1), pages 185-201, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:soudev:v:14:y:2019:i:3:p:257-280. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.