Rural wages in India: Recent trends and determinants

This paper looks into the overall trends in rural wages from 1983 to 2011–12, and attempts to analyse the factors that led to the unprecedented rise in rural wages (particularly since 2007–08) which attracted much policy debate. Did growth in agricultural productivity lead to the unprecedented rise in rural wages? Or was the uptrend determined by factors outside the agricultural sector, most importantly the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) since 2006–07, and the overall economic growth with the resultant structural changes in the labour market? Using panel data regression, the paper finds that the MGNREGA was not the sole factor responsible for this uptrend, as has been claimed by several researchers. Factors such as agricultural productivity, construction sector growth, urbanisation, and literacy also majorly contributed to the rise in rural wages. © 2017, Indian Society of Labour Economics.