STRUCTURAL CHANGES AND THE DISTRIBUTION OF INCOME BY SIZE: THE CASE OF INDIA

Subramanian Swamy

Review of Income and Wealth, 1967, vol. 13, issue 2, 155-174

Abstract: The interrelation between changes in the economic structure, i.e., industrial distribution of income and labor force, and the size distribution of income is studied in this paper in a case study of India (1951–1960). The change in the size distribution of income is the sum of changes due to (1) inter‐sectoral factors and (2) intra‐sectoral factors. The need for this distinction is emphasized by the result obtained for India, that 85% of the changes in the size distribution may be assigned to inter‐sectoral factors, and only 15% to intra‐sectoral factors. Since the inter‐sectoral factors are significantly influenced by changes in the industrial distribution of income and labor force, our result points out a relation between economic growth and the size distribution which quite often is overlooked in studies of the size distribution. The results obtained in this paper support several cross‐section results of Professor Kuznets. In particular some of these are: (a) inter‐sectoral inequality in the economic structure widened with economic growth, (b) the inequality in the size distribution of India widened, (c) the level of inequality in India is higher than in any of the eight developed countries considered.

Date: 1967
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