Inter-Religious Wage Differentials in India: A Focus on Socially Vulnerable Groups

Abstract

Despite India’s notable economic growth in recent years, significant social stratification persists. Traditionally, Hindu Scheduled Castes (SCs), Hindu Scheduled Tribes (STs), and Muslims have been identified as socially vulnerable and disadvantaged groups. While SCs/STs have gained from reservation policies in education, employment, and politics, Muslims, who share reservation quotas with other vulnerable groups, have seen comparatively less benefit. Prior research has focused primarily on disparities between religions (e.g., Hindu and Muslim) or castes (e.g., Hindu general caste and lower caste). However, few studies examine inequality among socially vulnerable groups. This study explores two key research questions: (1) How has the wage differential structure between SCs/STs and Muslims changed? (2) What factors contribute to the wage differences between these two groups? I apply a Mincer earnings regression, Heckman two-stage estimation, and Blinder–Oaxaca decomposition to repeated cross-sectional data from the National Sample Survey (NSS) and the Periodic Labour Force Survey (PLFS). These data cover 35 years and pertain to male regular workers (salaried employees) and casual laborers aged 15–65 in urban areas. The data are derived from eight NSS rounds (1983, 1987–88, 1993–94, 1999–2000, 2004–05, 2007–08, 2009–10, and 2011–12) and two PLFS periods (2017–18 and 2018–19). Descriptive statistics indicate a rise in the percentage of SCs/STs among male regular workers from 1983 to 2018–19. Although both Muslims and SCs/STs experienced a significant decrease in primary school non-completion rates, the rate of improvement in educational attainment for Muslims has been comparatively slow. The Mincer earnings regression results reveal consistently lower wages for SCs and Muslims compared with Hindus (general castes/Other Backward Classes). The Heckman two-stage estimation results show that SCs and Muslims are less likely to be regular workers than Hindus. Even after excluding bias, Muslims earn significantly less than Hindus. The Blinder–Oaxaca decomposition, using the inverse Mills ratio from the two-step estimation, shows that wage differentials are due to differences in education level and years of experience in the labor market between SCs/STs and Muslims. Wage differentials between Hindus and Muslims persisted throughout the study period, with about 40% to 60% of total wage differentials explained by differences in education levels. Initially, there was no difference between SCs/STs and Muslims. However, since the mid-2000s, the contribution has varied significantly owing to the improved average education level of SCs/STs, suggesting that institutional inequality could exacerbate disparities among the socially vulnerable.