Occupational Segmentation and Earning Differences across Social Class: An Investigation from Rural Odisha

The theory of labour market segmentation argues that caste, race, gender, etc. are the main factors explaining labour market participation and wage differentials across different segments (Gordon 1972, Reich et. al. 1973). The theory, therefore, challenges both neoclassical and human capital theories and emphasize that workers and jobs are not perfectly matched by competitive market equilibrium. With the scheme of social stratification coupled with economic and social discrimination, there appears to be unequal participation in labour market by different social segments. The present paper seeks to examine occupational segmentation by different social groups and their earning differences with the help of primary data from Odisha. It concludes that households belonging to Scheduled Caste and Scheduled Tribe categories are far behind other social groups such as General and OBCs in terms of different social and economic indicators. Social affiliation, land holding status, employment status and educational status are variables that determine earning differences across the households surveyed. The findings did not rule out the gap in human capital and existing resource base in explaining wage difference across different social groups.