DECOMPOSITION ANALYSIS OF EARNINGS INEQUALITY IN RURAL INDIA 2004-2012

Shantanu Khanna, Deepti Goel, and René Morissette
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Shantanu Khanna, Deepti Goel, and René Morissette: Centre for Development Economics, Delhi School of Economics, University of Delhi, India
Authors registered in the RePEc Author Service: Shantanu Khanna (s.khanna@northeastern.edu)

No 250, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: We analyze the changes in earnings of paid workers (wage earners) in rural India from 2004/05 to 2011/12. Real earnings increased at all percentiles, and the percentage increase was larger at the lower end. Consequently, earnings inequality declined. Recentered Influence Function decompositions show that throughout the earnings distribution, except at the very top, both changes in ‘worker characteristics’ and in ‘returns to these characteristics’ increased earnings, with the latter having played a bigger role. Decompositions of inequality measures reveal that although the change in characteristics had an inequality increasing effect, chiefly attributable to increased education levels, inequality declined because workers at lower quantiles experienced greater improvements in returns to their characteristics than those at the top.

Keywords: Earnings; Inequality; Earnings Distribution; Rural India (search for similar items in EconPapers)
JEL-codes: J30 J31 O53 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2015-12
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Related works:
Journal Article: Decomposition analysis of earnings inequality in rural India: 2004–2012 (2016)
Working Paper: Decomposition Analysis of Earnings Inequality in Rural India: 2004-2012 (2016)
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