Improvement of Socio-economic Conditions and Distribution of Consumption Expenditures: Case Study of India's Poverty Decline over Two Decades

Takahiro Ito

No 2-9, IDEC DP2 Series from Hiroshima University, Graduate School for International Development and Cooperation (IDEC)

Abstract: This paper examines how living standards in India have improved over two decades, focusing on the distribution of household-level consumption expenditures. The analysis is conducted using the DiNardo-Fortin-Lemieux (DFL) semi-parametric decomposition method. This method offers two desirable features, which enable us to avoid the traditional pitfalls of (semi-)macro-level poverty analysis. The estimation results indicate that regional heterogeneity in poverty decline is very large, and different regional factors contribute to the poverty decline at different stage of development. From 1983 to 1993/94, regional education (measured by literacy rate) is the main engine of the poverty decline. It accounts for 85% of the total poverty decline in this period. During the following 10 years, the labor market condition has a significant role in reducing poverty. Especially, wage and employment growth in the non-agricultural sector is the key to the improvement of living standards. In addition, agricultural wage employment is still important to reduce poverty in rural areas.

Keywords: Consumption expenditures; kernel density estimation; poverty; regional development (search for similar items in EconPapers)
JEL-codes: D31 I32 R20 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012-03
New Economics Papers: this item is included in nep-agr and nep-geo
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