Following the economic reforms program undertaken by India, many studies have estimated the impact liberalisation on labour productivity. However, associated with rising labour productivity is the problem of growing wage inequality between skilled and unskilled workers. But this aspect of liberalisation has generally been ignored in the literature. This paper is a pioneering attempt in estimating the impact of three major components of liberalisation, that are foreign direct investment (FDI), trade and technological progress, on labour productivity and wage inequality in the Indian manufacturing sector.
