Exploring Earnings and Education Disparities in India across Region, Caste, Religion and English Language Ability

The present paper estimates the extent of disparity in earnings across location, caste, religious and English language ability groups. Using IHDS-2005 data, gross private returns to education are estimated by applying Heckman selection model. Results confirm that returns to education increase with level of education across various groups. Both gross (and net) returns to elementary education are low across different groups, indicating low quality of basic schooling. Returns to higher education vary ranging from -29.10 per cent (-26.9 per cent net returns) among the Dalit-Adivasi workers with the highest returns of 38.2 per cent (34.08 per cent net returns) among fluent English ability group. This is in contrast to Duraisamy (2002) reporting the highest returns to secondary education between 1983 and 1993-1994. In a decade's time, with transformations in the economy and in labour market, higher education especially with English language ability brings in highest returns. Discrimination of caste and minorities influencing earnings is dominant in urban than in rural areas.