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Poverty traps, convergence, and the dynamics of household income

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  • Arunachalam, Raj
  • Shenoy, Ajay
Abstract
We design a new method to detect household poverty traps. We apply the method to a unique panel that follows rural Indian households over thirty years. We find no evidence of poverty traps. Most households had annual income growth of over 2%, and income mobility is high. We then design and apply a method to detect conditional convergence. We find that upper castes are converging to a level of wealth 3 times as high as disadvantaged castes.

Suggested Citation

  • Arunachalam, Raj & Shenoy, Ajay, 2017. "Poverty traps, convergence, and the dynamics of household income," Santa Cruz Department of Economics, Working Paper Series qt60r1q8ps, Department of Economics, UC Santa Cruz.
    • Handle: RePEc:cdl:ucscec:qt60r1q8ps
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    2. Li, Hao & Millimet, Daniel L. & Roychowdhury, Punarjit, 2019. "Measuring Economic Mobility in India Using Noisy Data: A Partial Identification Approach," IZA Discussion Papers 12505, Institute of Labor Economics (IZA).
    3. Zhilong Wu & Bo Li & Xuhuan Dai & Ying Hou, 2020. "Coupled Relationship between Rural Livelihoods and the Environment at a Village Scale: A Case Study in the Mongolian Plateau," Land, MDPI, vol. 9(2), pages 1-22, January.
    4. Janz, Teresa & Augsburg, Britta & Gassmann, Franziska & Nimeh, Zina, 2023. "Leaving no one behind: Urban poverty traps in Sub-Saharan Africa," World Development, Elsevier, vol. 172(C).
    5. John K. Pattison‐Williams & Philippe Marcoul & Sandeep Mohapatra, 2023. "Intrahousehold moral hazard frictions and household poverty traps in rural India," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(1), pages 67-96, January.
    6. Alloush, M., 2018. "Income, Psychological Well-being, and the Dynamics of Poverty: Evidence from South Africa," 2018 Annual Meeting, August 5-7, Washington, D.C. 274223, Agricultural and Applied Economics Association.
    7. Clare Balboni & Oriana Bandiera & Robin Burgess & Maitreesh Ghatak & Anton Heil, 2023. "Why Do People Stay Poor?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(2), pages 785-844.
    8. Sandeep Mohapatra, 2021. "A new approach for detecting multiple‐equilibria poverty traps," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(5), pages 894-909, July.
    9. Yun Xu & Xiaoping Qiu & Xueting Yang & Guojie Chen, 2018. "Factor Decomposition of the Changes in the Rural Regional Income Inequality in Southwestern Mountainous Area of China," Sustainability, MDPI, vol. 10(9), pages 1-15, September.
    10. Donatella Saccone & Matteo Migheli, 2022. "Free to escape? Economic freedoms, growth and poverty traps," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1518-1554, August.
    11. Smith, Tim & Delgado, Michael, 2018. "Agricultural Transformation and Intergenerational Mobility in the U.S., 1940-1970," 2018 Annual Meeting, August 5-7, Washington, D.C. 274162, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    No Poverty; Applied Economics; Development Studies;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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