Religion in the labor market: evidence from India

In this paper, we analyse the education and wage gaps between Hindus and Muslims over the period 1983 to 2011-2012 in India. We find that Muslims are worse off than Hindus in terms of education and this disadvantage has increased over time. Our analysis shows that the wage gap is more pronounced at the higher end of the wage distribution which we interpret as a glass ceiling effect. We find that the wage gap has increased over time and the increase is more pronounced at the upper quantiles. Our decomposition analysis shows that difference in education has a significant contribution to the Hindu-Muslim wage gap. We find that the Hindu-Muslim gaps are more pronounced in urban areas relative to rural areas. Comparing Muslims with different Hindu castes, we find that while the disadvantaged castes have improved their condition relative to Muslims over time, the condition of Muslims relative to the advantaged castes has worsened. Dividing the sample into younger (aged 16-35) and older (36-65) cohorts, we find that the Hindu-Muslim gap in education is more acute in the younger cohort while the Hindu-Muslim wage gap is more pronounced for the older cohort.