Growth, employment patterns and inequality in Asia a case study of India

This paper argues that economic inequalities in India have been driven by employment patterns and changes in labour markets, which in turn have been affected by macroeconomic policies and processes as well as forms of social discrimination and exclusion. While many Asian economies have shown indications of rising inequality in recent decades, the Indian experience is particularly remarkable in the way inequalities have intertwined with the economic growth process. Structural change (or the relative lack of it) and the persistence of low productivity employment in India are strongly related to falling wage shares of national income and growing wage inequalities, and the close relationship between formal and informal sectors is the sharpest exemplar of this. Patterns of social discrimination along gender and caste lines have reinforced tendencies to create segmented labour markets that offer little incentive for employers to focus on productivity improvements.