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Decomposition analysis of earnings inequality in rural India: 2004–2012

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Date
2016
Dewey
Economie du travail
Sujet
Earnings; Inequality; Earning distribution; Rural India
JEL code
J.J3.J30; J.J3.J31; O.O5.O53
Journal issue
IZA Journal of Labor & Development
Volume
5
Number
18
Publication date
12-2016
Publisher
Springer
DOI
http://dx.doi.org/10.1186/s40175-016-0064-8
URI
https://basepub.dauphine.fr/handle/123456789/18065
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Author
Khanna, Shantanu
18303 University of California
Goel, Deepti
33852 Institute for the study of labor [IZA]
Morissette, René
161741 Statistics Canada
Type
Article accepté pour publication ou publié
Abstract (EN)
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.

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