foreign direct investment on wage inequality in india.doc

Wage inequality and the return to skills started in the late 1970. There is a significant increase in wage inequality in the 1980s. In particular during 1980s the largest increase in wage inequality was in United State the empirical evidence shows that the wage for the most skilled workers rose by about 40 percent whereas the wage of least skilled workers decreased by about 50 percent in United State. A great number of recent researches attempt to study the significant increase in wage inequality that occurs in the1980s. For example (Bluestone and Harrison 1988; Katz and Murphy 1992; Levy and Murname1992; and Murphy and Welch 1992) find that the wage ratio between highly educated and less educated workers was substantially increased. (Bound and Johnson1992; Juhn Murphy and Pierce 1993 ) propose the wages of more skilled workers are increased relative to those of less-skilled workers. Furthermore David (1992) shows the evidence on wage inequality in four middle-income countries which are Brazil Columbia South Korea and Venezuela. The data after 1986 shows that all countries except Columbia increase in wage inequality.