How do linguistic and technical skills affect earnings in India?

Abstract

This paper estimates the returns to education and skill in India by gender, sector, religion, caste and regional zone using nationally representative data provided by the India Human Development Survey (IHDS) 2011–2012. To address the issue of sample selection bias, Heckman two-step procedure is used. The findings show that education and skill drive wage earnings. However, the impact of skills is larger than that of education per se. Though there are inequalities on various grounds, education and skill are found to have a stabilising effect as they help females and other disadvantaged groups improve their earnings. The findings of the study call for the necessity of imparting skills along with education to ensure better labour market outcomes for the people.