The rural-urban wage gap. Migration and the working of urban labour market. An interpretation based on a study of the workers of Bombay city
Mazumdar, D.
Indian Economic Review 18(2): 169-198
1983
ISSN/ISBN: 0019-4670 Document Number: 345470
The paper presents a survey of the labour market in India in 1973/74. It also uses the data of Joshi and Joshi on the growth of employment by sector for 1961-71. Differences in earnings were found to be substantial between sectors of the labour market. Workers in the largest factories earn just above twice as much as casual workers. Activities with lower levels of earnings have a larger proportion of migrants with a short duration of urban residence. Family size in Bombay is also significantly smaller for migrants in low wage activities. The alternative view that wage differences are caused by institutional factors is not supported, as the wage determining mechanism is seen to operate within the non-factory sector in which institutions do not play an obvious part in wage determination. The Harris-Todaro model of migration is not useful unless it can be demonstrated that wages are in fact higher than the relevant supply price. It is further weakened by the small number of jobs opening up for fresh markets like Bombay. Unemployment before the first urban job was very uncommon among Bombay migrants. 'Graduation' in the urban labour market is significant.