The study investigates the possible relation between agglomeration economies
and wages of hired workers in the unorganised manufacturing sector. In
particular, effect on firm level wages of industrial diversity of organised
manufacturing sector in a district, measured by Herfindahl index, has been
analysed. Industrial diversity creates opportunities for intra-industry linkages,
knowledge spillovers and greater innovation. Using geographical map of India,
the study observes that the districts which are industrially more diverse have
relatively higher level of wages. While empirical estimations reveal that a number
of industries that are situated in districts with diverse presence of industries in the
organised manufacturing sector have a positive effect on the per capita wages of
hired worker in unorganised manufacturing sector. The impetus required in
augmenting the process of agglomeration at regional level has been highlighted at
the end.