Manufacturing Activity and Inequality in India

Balu Pawde (), Tara Shankar Shaw and Pushpa L. Trivedi
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Balu Pawde: Indian Institute of Technology Bombay
Tara Shankar Shaw: Indian Institute of Technology Bombay
Pushpa L. Trivedi: Shiv Nadar University

Journal of Quantitative Economics, 2024, vol. 22, issue 4, No 6, 944 pages

Abstract: Abstract We examine the relationship between manufacturing activity and inequality in India at the district level. Our inequality measures are defined on both consumption expenditure and earnings. The measures of manufacturing activity are based on district-level manufacturing activities. Controlling for district-level fixed effects, we show that there exists a U-shaped association between manufacturing activity and inequality, implying that inequality first decreases and then increases following the growth of manufacturing activity. In the attribution exercise, we observe that this relationship between manufacturing activity and inequality operates through the employment channel. Our results are robust to the alternative measures of manufacturing activity and inequality and to alternative estimation where we control for the spatial correlation across the districts.

Keywords: Manufacturing industry; Inequality; Spatial models; Regional inequality (search for similar items in EconPapers)
JEL-codes: D63 E24 O14 R12 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40953-024-00416-8

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