Wage Behaviour in India’s Organised Manufacturing Sector: A State–Industry Panel Analysis

This study examines wage dynamics in India’s organised manufacturing sector using a panel data framework based on state–industry level data from the Annual Survey of Industries (ASI) for the period 1993–94 to 2023–24. The analysis focuses on the role of labour productivity, capital intensity, contract labour intensity, firm size, and ownership structure in shaping wage outcomes. A static panel model is estimated using pooled ordinary least squares, fixed effects, and random effects techniques, with results indicating the suitability of the fixed effects model. The findings reveal that labour productivity and capital intensity have a positive and statistically significant impact on wages, highlighting the importance of efficiency and technological progress. In contrast, contract labour intensity exerts a negative effect on wages, reflecting the growing influence of labour flexibility and segmentation within the organised sector. Firm size is found to positively influence wages, while ownership structure indicates variations in wage-setting behaviour across sectors. The study contributes to the literature by providing an integrated empirical framework that captures both cross-sectional and temporal variations in wage dynamics. The results underscore the importance of structural and institutional factors in shaping wage outcomes and suggest the need for policy interventions aimed at enhancing productivity, regulating contract labour, and promoting inclusive wage growth in India’s organised manufacturing sector.