Education, Labour Market Distortions and Relative Earnings of Different Religion-Caste Categories in India (A Case Study of Delhi)

ABSTRACT The paper ascertains the relative earnings differential among the male adult employees belonging to different religion-caste (RETE) categories. The earnings differentials then are decomposed into a portion attributable to personal characteristics, socio-economic background and job-related variables and the residual attributable mainly to labour-market distortions. It has been found that there is significant difference among RETE categories in terms of type and level of education. Also the returns to education vary with the level and type of education as well as among RETE categories. Further, empirical findings indicate that the impact of education and other human capital variables, socio-economic baçckground and job-related variables varies among the employees of different RETE categories i.e. the sources of earnings differentials differ significantly among the RETE categories. An important public policy implication is that uniform public policies to improve the relative earnings position of the disadvantaged RETE categories might be less effective than strategies that consider the particular circumstance of each category. The elimination of educational disadvantage might be the prescription for some RETE categories while equalizing employment opportunities might be more important for others.