This is a power point presentation of Ph.D Proposal

1. Title
Human Capital and Income Inequality
A Study of Knowledge-Based Industries in India
Aditya Samdershi
adityaeco99@gmail.com
Doctoral Candidate- 2014 , NUEPA
Ph.D. Supervisor
Professor N. V. Varghese
CPRHE, NUEPA
Ph.D. Proposal

2. Contents
 Motivation of the Study (Problem Statement)
 Challenges of Human Capital Theory
 Knowledge-Based Industries
 Conceptual and Theoretical Framework
 Theoretical Framework
 Empirical Studies
 Research Plan
 Research Questions and Objectives
 Data Sources and Methodology
 Chapter Plan
 Implications of the Study
 Scope and Implications

3.  The progress of technological rationality is supposed to lead
automatically the triumph of human capital over financial
capital……Inequality would thus become more meritocratic
and less static……….and economic rationality would give rise
to democratic rationality (p. 22) (Piketty, 2014)
Motivation of the Study (Problem Statement)
Challenges of Human Capital Theory
Problem Statement; Human Capital and its influence on Income Inequality

4. Knowledge-Based Industries
 Characteristics
– Knowledge as input, process and product (intensively and
relatively higher than physical and natural resources)
– Technology and Human Capital contributes more than
physical capital (Nagesh Kumar, 2011)
 In India, Knowledge Based Industries are engaged in; software
development, consultancy, pharmaceuticals, financial services,
engineering services, biotechnology etc.
Criterion of Identification :-
I. Not less than 60% Employee have Graduate Education
II. Not less than 60% input cost goes to Human Capital and Technology
(Derived from OECD,2008 classification)

5. Conceptual and Theoretical
Framework
 Three fourth of the Incomes of the world are from earnings (J.Pen, 1971)
 Earning is Determined by Productivity of Labour (Mankiw,2006)
 Human Capital Theory (Schultz1961,Becker1962,1964)
– knowledge and skills gained through education lead to rise in
productivity of labour, hence wages.
 Criticisms; a)Bowles and Gintis (1975), b) Arrow and Spence (1973)
 Job Competition Model; Thurow (1973)
 Segmented Labour Markets - Reich, Gordon and Edwards (1973), Carnoy
and Rumberger (1976)

6. Conceptual and Theoretical
Framework
 A Case of Knowledge-Based Economy (OECD-2008)
 Relatively – Less rigidity in Job slots.
 -- Lesser Segmentation in Knowledge workers
 -- Project mode compensation, Stock Options (KBIs
recommendations of N.R. Murthy Committee India)
Human
Capital
Theory
Labour Market
Theories on HCT
Knowledge
Based-Industries
Criticism
Of HCT
Use of Human Capital
in company valuation

7. Conceptual Framework and Related
Empirical Studies
 Katz and Murphy (1992, 2007)
 Dur and Tullings (1973)
Human Capital with
Technical Education
Human Capital with
General Education
Rise in
Inequality
Human Capital with
Technical Education Human Capital with
Technical EducationRise in Real wages
Reduction in Inequality

8. Research Questions and Objectives
 Q1. What are the factors determining earnings in
Knowledge-based industries?
 with an objective O1/ To analyse the factors responsible for
determination of wage earnings.
 The underlying idea to formulate this Research Question is; There
will be several factors responsible for determining certain wages in
this kind of industry, what is the relative impact of Human Capital
among those factors.

9. Research Questions and Research
Objectives
 Q2. Whether the stock of Human Capital has an
impact on distribution of wages in Knowledge-based
industries?
 with an objective O2/ To empirically examine the influence of
human capital concentration in an industry on wage distribution
 O3/ To assess the trends of distribution of human capital and income
inequality.
 The underlying idea to formulate this Research Question is to
evaluate cumulative impact of human capital on wages.

10. Empirical Studies and
Methodological Framework
 The Distribution of Labor Incomes: A Survey With Special Reference
to the Human Capital Approach ---Jacob Mincer (Journal of
Economic Literature), Vol. 8, No. 1, (Mar., 1970)
 This study has found the impact of human capital on wages with
some distinction of age cohort, gender etc.
ln(𝑤𝑎𝑔𝑒)𝑖𝑡= 𝛽0 + 𝐸𝑑𝑢𝑖𝑡 𝛽1
𝑇
+ 𝛽2
𝑇
𝐴𝑏𝑖𝑙𝑖𝑡𝑦𝑖 + 𝛽3
𝑇
𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒𝑖𝑡
+ 𝛽4
𝑇
𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒𝑖𝑡
2
+ 𝑋𝑖𝑡 𝛽5
𝑇
+ 𝜖𝑖𝑡 … … … … … … … … . . 𝑎
 For Research question one modified Mincerian equation will be used
to analyse factors determining wages in knowledge based industries.
 For RQ2/ Cumulative distribution function will be used to assess
distributional component.

11. Data Sources:-
 Based on KBI’s definition Two typical and relatively identical firms
with employees strength more than 700 will be selected.
 Stratified Random Sample from the occupational designation
 Primary Survey Based on questionnaires covering
Human capital factors, structural and institutional
factors, professional and motivational factors.
Managers/
Executives
Support Services
Professionals Technical Assistants
Knowledge
Workers
ISCO-2008

12. Chapter Plan
I. Introduction
II. Review of Literature
III. Description of Data and Methodology
Classification of Knowledge-Based Industries.
Defining Characteristics
Outline of Questionnaire
IV. Analytical Background (Preparing for the Stage of Analysis)
Data Cleaning
Defining variable
Providing Justification for variables
V. Determinants of Earning (Analysis)
VI. Impact of Human Capital on Income Inequality (Analysis)
V II. Discussion on Results
VIII. Conclusion
Bibliography

13. Scope and Implication of the Study
 This study is analytical in its nature and scope, and it
will follow the assumptions of Human Capital Theory
and labour market imperfections.
 Combating Inequality more precisely with an
instrument of “Targeted investment in Education” for
underprivileged sections of society.
 Contributing to the literature on human capital theory in
the context of Knowledge-based Industries and its
characteristics.

14. Acknowledgement
 However, the domain of Human Capital Theory is not new
to doctoral researches but, formulating a new proposal
became possible with the guidance and support of several
human agencies. I must acknowledge their contributions
to this proposal.
 Professor N.V.Varghese, (CPRHE, NUEPA)
 Dr. Garima Malik (CPRHE, NUEPA)
 I have also consulted several faculty members and Research
Scholars of NUEPA and some are from outside NUEPA for preparing
this proposal.
 I also make my claim for shortcomings of this proposal.