Decomposition Analysis of Earnings Inequality in Rural India: 2004-2012

Shantanu Khanna (), Deepti Goel () and René Morissette
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René Morissette: Statistics Canada

No 9974, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: 2016-05
New Economics Papers: this item is included in nep-dev and nep-lma
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Citations: View citations in EconPapers (4)

Published - published in: IZA Journal of Labor & Development, 2016, 5 (18)

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Related works:
Journal Article: Decomposition analysis of earnings inequality in rural India: 2004–2012 (2016)
Working Paper: Employment and Earnings in Rural India: 2004-2012 (2016)
Working Paper: DECOMPOSITION ANALYSIS OF EARNINGS INEQUALITY IN RURAL INDIA 2004-2012 (2015)
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