Unveiling social disparities in employment and wages: a labour market segmentation analysis of India’s IT industry

Purpose This study investigates the caste-based disparities in employment probabilities and wage earnings within India’s rapidly growing IT industry, using insights from the labour market segmentation theory. Our theoretical conceptualization attempts to pin down the inaccessibility of marginalised sections of the population to the high productivity job market. Design/methodology/approach We rely on the National Sample Survey rounds of 2011–2012 and 2020–2021 to estimate employment probabilities and wage differentials using linear and logic regression models, controlling for educational attainments and other important determinants of individual’s job market outcomes. Findings The results indicate a significant −1.24 odds differential, even after considering education and other control variables. Notably, this disparity has increased since 2011–2012, with lower caste graduate pass-outs facing a mere 13% probability of IT sector employment compared to their upper caste counterparts at 41%. Further, our findings expose gender and rural-urban differentials, highlighting the vulnerability faced by females and individuals from rural areas. The wage analysis shows a 24% and a 22% earning gap for SCs and OBCs, respectively, which remain statistically significant even after controlling for educational attainments and employment arrangements. Originality/value This is first micro-level study that counters Indian IT sector’s claim of “castelessness” and “pro-merit”, identifying significant presence of labour market segmentation in the sector. The caste-based labour market segmentation has far-reaching consequences as it can perpetuate income inequalities and hurt industrial efficiency, stifling economic growth in the long-run. Concerted policy responses are imperative to eliminate structural barriers, ensuring equitable access to quality education and employment opportunities for marginalized sections of the society.