Wage level and its movements are central to the theory of distribution. Wage studies, therefore, entail exploration in every branch of the economy. The market wage or spot wage for labour in the unorganized sector is reported to be considerably different for different districts within a geographical entity and further intra-state wage differential for the same type of labour and work is found persisting for a long period (Jose 1978). This chapter addresses the question of why the daily wage rates for rural labour, particularly for those in the unorganized segment of the farm sector, differ significantly across districts in a relatively small geographical entity like Kerala. The question of spatial wage differentials assume significance in the context of Kerala for two reasons, namely (1) unorganized segment of the rural labour market is well organized under radical political movements in the local state; (2) daily wage labourers (labouring poor) in the state are rather known for their work-related mobility within and outside the state, implying that the labour would move to high-wage zones from low-wage zones. It is argued in the chapter that the state, in general, creates and maintains peripheries by keeping wage low in certain localities within the geographical boundaries of the state. The conventional wage determination model fails to capture the intervention of the state on behalf of capital in the rural labour market. The discussion is organized as follows. The first section reviews how different schools of thought addressed the wage question and the spatial wage differentials, followed by a brief description of the area and sample selection procedure adopted for the study in the second section. In section three, discriminatory policies and programmes of the state (local state in this context) to reproduce and perpetuate low-wage zones and labouring poor within the jurisdiction of a sub-state is analysed. The difference in the living standard of workers in low-and high-wage districts are analysed in the fourth

section, followed by the last section presenting the conclusions of the study.