Income Convergence and the Flow Out of Poverty in India, 1994-2005

34 Pages Posted: 28 Sep 2013

See all articles by Paola Barrientos Quiroga

Paola Barrientos Quiroga

Aarhus University - School of Business and Social Sciences

Niels-Hugo Blunch

Washington and Lee University; IZA Institute of Labor Economics

Nabanita Datta Gupta

Department of Economics and Business, Aarhus University; IZA Institute of Labor Economics

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Date Written: August 26, 2013

Abstract

This paper explores the dynamics of income and poverty of rural Indian households over the period 1994 to 2005. The estimation strategy consists of a convergence analysis to test whether poor households are catching-up with rich ones in terms of income, followed by a transition analysis to test whether poor households are more likely to exit poverty than to remain poor. The identification strategy explicitly addresses issues pertaining to the potential endogeneity and measurement error of initial income and poverty. We find evidence of both income convergence and poverty reduction: poorer households are catching up to richer households over time and the bottom of the distribution is being lifted up. The key variables driving these results are education and asset ownership.

Keywords: Income determination, India, Household income, Poverty, Castes, Convergence

JEL Classification: I32, D1

Suggested Citation

Barrientos Quiroga, Paola and Blunch, Niels-Hugo and Datta Gupta, Nabanita, Income Convergence and the Flow Out of Poverty in India, 1994-2005 (August 26, 2013). Available at SSRN: https://ssrn.com/abstract=2330791 or http://dx.doi.org/10.2139/ssrn.2330791

Paola Barrientos Quiroga (Contact Author)

Aarhus University - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

Niels-Hugo Blunch

Washington and Lee University ( email )

Department of Economics
Lexington, VA 24450
United States

HOME PAGE: http://www.wlu.edu/williams-school/economics/faculty-and-staff/profile?ID=x258

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Nabanita Datta Gupta

Department of Economics and Business, Aarhus University ( email )

Fuglesangs Allé 4
8210 Aarhus V
Denmark
+45 87165207 (Phone)

HOME PAGE: http://pure.au.dk/portal/da/ndg@econ.au.dk

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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