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Decomposing the Certified and Uncertified Skill Wage Gap for Production Workers in India

Author

Listed:
  • Bhanu Pratap Singh

    (Banaras Hindu University)

  • Akash Yadav

    (Banaras Hindu University)

  • Kailash Chandra Pradhan

    (Mahatma Gandhi Central University)

Abstract

Due to the lower capacity of formal learning institutions, informal learning is the prominent source of learning to skill a larger population in India. Still, many skilled workers in India face the problem of lower wages and difficulty finding employment opportunities because of skill certification. The present study examines the impact of skill certification on monthly wages using augmented Mincer wage equations. Oaxaca-Blinder decomposition is employed to study wage differentials between certified and uncertified skill workers. The empirical findings suggest that workers’ characteristics such as skill certification, extended training period, superior occupational status, permanent job tenure, higher education level, membership in trade unions, and job experience help them earn higher monthly wages. The wage gap between certified and uncertified skill production workers is also observed based on skill certification. In addition, the wage gap is reduced by characteristics such as the long duration of the training, membership in trade unions, and job experience. However, uncertified skill workers face wage discrimination with rising age. In India, it is crucial to reduce wage differential due to skill certification to improve competitiveness, efficiency, and productivity in the labor market. Therefore, the government should promote skill development and certification of skills acquired through informal learning to achieve developmental goals.

Suggested Citation

  • Bhanu Pratap Singh & Akash Yadav & Kailash Chandra Pradhan, 2024. "Decomposing the Certified and Uncertified Skill Wage Gap for Production Workers in India," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 888-916, March.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:1:d:10.1007_s13132-023-01118-x
    DOI: 10.1007/s13132-023-01118-x
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    More about this item

    Keywords

    Skill development; Skill certification; Wage gap; Decomposition;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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