Earnings differentials between public, private and joint sectors in Punjab (India)

Abstract

Using the data collected by the Economic and Statistical Organisation of Government of Punjab under the survey ‘The Working Class Family Income and Expenditure in Punjab, 1975–76’, we estimated the expanded version of the human capital model. On the average public sector workers are paid much higher wages than the private and joint sector workers. In the first part of the article, we have estimated the earnings equation for the workers of public, private and joint sectors separately. In the second part, we have decomposed the difference between the average earnings of public and joint sector workers into two parts ‐ the portion that exists due to the difference in endowments and personal characteristics of the workers of different sectors, and the portion that exists due to the difference in pay structures of different sectors.

Notes

The authors are Assistant Professor of Economics and Management Science at Eastern Connecticut State University, Willimantic CT‐06226, USA, and Associate Professor of Management Science at California State University, Fullerton CA‐92634, USA respectively. They would like to thank an anonymous referee for useful comments on an earlier version of this article.