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IIM Indore

This paper focuses on spatial disparities in household earnings in rural and urban India. A point of departure from the existing literature on inequality in India is that we focus on household earnings rather than consumption expenditure. We analyse data from the nationally representative Periodic Labour Force Survey 2018-19. We provide a rich description of distribution of rural and urban monthly per capita household earning at the national and sub-national level and estimates of earnings inequality. While there are a multitude of factors that affect the evolution of income inequality, we focus on the salience of urbanization in explaining differences in inequality at the sub-national level vis a vis India. The results of the decomposition exercise help identify the proximate factors behind inequality differentials across various states. We situate our findings within the Kuznets framework and the stylized facts in the extant literature.&nbsp;

Economics

World University root node

Indira Gandhi Institute of Development Research, Mumbai Working Papers

Spatial disparities in household earnings in India: Role of urbanization, sectoral inequalities and rural-urban differences

Using a national level sample survey on labour market in India, we analyze the role of education–occupation (mis-)match (EOM) in explaining within-group dispersion in returns to education. Applying a double sample selection bias correction and Mincerian quantile wage regression estimation, the analysis reveals interesting findings. First, on average, overeducated workers suffer a wage penalty of 7% and undereducated workers do not receive a wage reward as compared to their adequately educated counterparts. Second, the inclusion of match status reduces within-education group dispersion in returns. The finding highlights that ignoring EOM and thus, adopting a restrictive view of similarity across workers may lead to overestimation of the within-education group dispersion in returns. This study argues for focusing on EOM to increase both pecuniary and social benefits of education in terms of productivity gains and wages as well as to reduce wage dispersion. © 2020, Springer Nature B.V.

Fulltext

Social Indicators Research

Education–Occupation Mismatch and Dispersion in Returns to Education: Evidence from India

In this article, we analyse misleading advertising competition between private firms (profit oriented) and consumer-oriented firms (concerned about consumer welfare) in the context of mixed markets. The nature of advertising in this article is assumed to be non-rival in nature and is beneficial to all the firms in the market. We find that, both private and consumer-oriented firms incur positive expenditure on misleading advertising. Further, the profit of consumer-oriented firms is higher than that of private firms. Moreover, irrespective of whether firms are concerned about consumer welfare or not, the level of misleading advertising is socially excessive.

International Journal of the Economics of Business

Misleading advertising in mixed markets: non-profit orientation and welfare outcomes

Despite an increase in the number of workers commuting between rural and urban areas, much of the literature on worker mobility continues to be migration centric. This paper establishes the importance of rural–urban commuting in India. As per estimates from Periodic Labour Force Survey 2018–2019, an estimated 18.8 million individuals living in rural are working in urban India and the share of earnings from urban in total non-farm rural earnings is 19.3%. Among all rural workers, 7.3% are rural–urban commuters while only 2.1% of urban workers are urban–rural commuters. We document large variations at the sub-national level. Our results from a multinomial model to understand the factors associated with commuting highlight the importance of lagged regional unemployment rate. A high rural unemployment rate acts as a push factor, and a low urban unemployment rate acts as a pull factor for rural–urban commuting. The urbanness of occupations in a region is also an important correlate of commuting. The paper concludes by highlighting the need to prioritize questions in India’s labour force survey that would help understand the nature of labour mobility and strength of rural–urban linkages. © 2020, Indian Society of Labour Economics.

The Indian Journal of Labour Economics

Regional Patterns and Determinants of Commuting Between Rural and Urban India

This paper is an att empt to extend the dialogue on the nature of commuting between rural and urban areas and its implications for labour market outcomes in rural and urban India. We show that over the period 2004-2005 to 2011-2012, the magnitude of commuting workers has not changed but the composition has changed with reduction in rural no fi xed place workers and increase in urban-no fi xed place workers. We further highlight that rural-urban commuting can be considered mobility for bett er opportunities on account of diversifi cation of livelihood strategy and underemployment in rural areas.

Built Environment

Commuting between Rural and Urban Areas: Evidence from India

We analyze Nash equilibrium in fiscal competition with tax and public investment between symmetric regions. We show that given the opposite strategic nature of tax (strategic complement) and public investment (strategic substitute), there is possibility of multiple equilibria. We find that if strategic substitute effect dominates strategic complement effect, then both regions have first mover advantage in a timing game and simultaneous move Nash equilibrium (early, early) emerges; otherwise sequential move equilibria-(early, late) and (late, early) emerges. Also, sequential move Nash equilibria are Pareto improving than simultaneous move outcome. Lastly, race-to-the-bottom in taxes is restricted in sequential move equilibria.

International Review of Economics & Finance

Nash equilibrium in tax and public investment competition

Using the first ever available information in Census of India 2011, covering 640 sub-national units (districts) in India, we analyze the correlates of modes of transport used by non-agricultural workers at the regional level covering both rural and urban areas. Providing a holistic picture from the perspective policy and academic perspective, we bring out some key stylized facts. Further, using the Seemingly Unrelated Regression (SUR) estimation, we model the transport mode choice for commuting by the workers in the context of rural and urban India and further extend it based on distinction in motorized and non-motorized transport modes. We find that urbanization level, population size and density along with education attainment and worker's sex ratio (gender ratio among workers), age (elderly) and land use mix play very important role in regional pattern in transport mode choice for commuting. These results highlight the dire need for proper development of transport infrastructure and understanding its various dimensions from socioeconomic , demographic and spatial point of view in the context of developing countries. Using the first ever available information in Census of India 2011, covering 640 sub-national units (districts) in India, we analyze the correlates of modes of transport used by non-agricultural workers at the regional level covering both rural and urban areas. Providing a holistic picture from the perspective policy and academic perspective, we bring out some key stylized facts. Further, using the Seemingly Unrelated Regression (SUR) estimation, we model the transport mode choice for commuting by the workers in the context of rural and urban India and further extend it based on distinction in motorized and non-motorized transport modes. We find that urbanization level, population size and density along with education attainment and worker's sex ratio (gender ratio among workers), age (elderly) and land use mix play very important role in regional pattern in transport mode choice for commuting. These results highlight the dire need for proper development of transport infrastructure and understanding its various dimensions from socioeconomic , demographic and spatial point of view in the context of developing countries. JEL Codes: L91, O18, R00, R23, R40 Acknowledgements: We are grateful for comments from the participants at ADBI and Sogang University Workshop on

IFMR GSB Working Paper WP19-02

Transport Mode Choice for Commuting: Evidence from India

Leadership (sequential choice) and political delegation are two mechanisms suggested to restrict “race-to-the-bottom” in tax competition. In this article, we analyze whether these two mechanisms when combined together would lead to unilaterally higher taxation or not. We show that political delegation with leadership in tax competition not only restricts race-to-the-bottom but also mitigates the possibility of overprovision of public good. In sequential choice game, only the follower region delegates taxation power to the policy maker but not the leader region. This puts a check on intensity of tax competition and restricts the under provision of public good.

Public Finance Review

Preferences over Public Good, Political Delegation, and Leadership in Tax Competition

Using a disaggregated dashboard approach with agriculture, food consumption, and demographic and health survey data, this study examines the progress of Indian states towards the Sustainable Development Goal (SDG) 2 on hunger and nutrition across different years. There is evidence of both disconnects and linkages among food security indicators along the agriculture-to-nutrition pathways across states. This heterogeneity implies that a food security policy with a single focus is not appropriate, given that there are more disconnects prevailing than linkages. The southern states performed better than the rest on almost all indicators, which was primarily attributed to better governance in ensuring food security. We also provide a mapping of the SDG 2 sub-goals, corresponding indicators, and to what extent their attainment is addressed in existing policies. Through a broadened and comprehensive approach under one coordinating body with a good set of improved interventions and governance, Indian states could attain food and nutrition security by 2030.

Food Security

Pathways from agriculture-to-nutrition in India: implications for sustainable development goals

This paper demonstrates that in a duopoly model with firms being concerned about profit as well as corporate social responsibility (CSR), the outcome of game may coincide with the Stackelberg outcome. We argue that owner of the firm may use CSR orientation as a strategy to become Stackelberg leader in the quantity competition game.

Economics Bulletin

A note on Stackelberg equilibrium in duopoly: Strategic use of corporate social responsibility

What is the intensity and level of domestic tourism in rural and urban India? What are the key reasons for households’ domestic tourism trips? What can we understand from domestic tourism patterns in India? Using National Sample Survey Office data on domestic tourism (2014–15), some of these questions are answered.

Economic and Political Weekly

Domestic tourism in India (2014-15): Evidence from NSSO

This paper analyses the informal channels of the job search process through migrant networks in the urban labour markets in developing countries. Using a novel approach and nationwide sample survey, we measure various aspects of migrant networks such as size, diversity, efficiency and experience content and estimate their effect on probability of employment. Our findings suggest that migrant stock (having experience content) has an inverted-U relationship with the probability of finding a job for a migrant. The share of employed workers in a migrant network (efficiency) and different origin identity (diversity) positively affect the employment outcome through weak ties. Further, the migrant network effect is more active in larger cities as compared to smaller urban areas. The implications of this study indicate towards the importance of non-market informal channels in job searches and the need for integrating labour markets to harness the benefits of larger positive network externalities.

The Journal of Development Studies

Migrant Networks in the Urban Labour Market: Evidence from India

This chapter contributes to the discussion on rural-urban interaction by focusing on daily commuting across rural and urban areas. Using the nationally representative survey on employment and unemployment, we provide an estimate of rural-urban and urban–rural commuting at the national and sub-national levels. We also highlight the phenomenon of workers who are tied to non-fixed places; they are also known as footloose workers. To complement the findings from the national survey, we provide insights from a small primary survey conducted in West Bengal, to support the understanding of the distance travelled by commuters, the modes of transport used and the job search process for daily commuters (especially workers attached to non-fixed places).

Subaltern Urbanisation in India

Commuting workers and the integration of the rural-urban economy

This paper demonstrates that in a duopoly model with firms being concerned about profit as well
as corporate social responsibility (CSR), the outcome of game may coincide with the Stackelberg
outcome. We argue that owner of the firm may use CSR orientation as a strategy to become
Stackelberg leader in the quantity competition game. 

WORKING PAPER

Stackelberg equilibrium in duopoly: strategic use of corporate social responsibility

Using non-parametric methods and India Human Development Survey 2004–2005, this study analyses the effect of urban proximity in terms of distance and connectivity on spatial pattern of land-use and development in the context of rural India. We find that, in urban surroundings, rural areas have diversified economic activities, intensive agriculture with higher spending on various inputs, higher economic wellbeing in terms of wages, income and consumption expenditure. We also document that transport and tele-connectivity are important for improved rural-urban linkages and changing rural landscape. These findings suggest that urban settlements are keys to development and inclusive growth in rural areas.

Urban Proximity and Spatial Pattern of Land Use and Development in Rural India

Drawing insights from the literature on transformation of rural non-farm employment, pathways from agriculture to nutrition, and linkages between migration and nutritional status of household, we seek to understand differences in dietary diversity across three mutually exclusive types of rural Indian households: where all members work in rural areas, at least one member commutes to urban areas, at least one member has no fixed place of work. Our analysis is based on a nationally representative data set from India for the year 2009&ndash;10 and we use propensity score matching methods. We find that as compared to households with no commuters, households with rural&ndash;urban commuters have higher dietary diversity; whereas households with no fixed place workers have lower dietary diversity. We also find differences in dietary diversity across households which differ by their primary source of income.

Food Policy

Impact of commuting by workers on household dietary diversity in rural India

Understanding the gender wage gap differential has remained an interesting issue among policy makers in both developed and developing countries. The last few decades have witnessed a fall in the gender wage gap mostly in the developed countries (Nicodemo, 2009). Glass-ceiling effect is found by Arulampalam et al. (2007) for eleven European countries, De la Rica et al. (2008) for Spain and Albrecht et al. (2009) for Netherlands. De la Rica et al. (2008) find evidence of glass ceiling effect for the highly educated and glass-floor effect for the less educated. Nordman et al., (2011) find higher wage gap differential across seven West African cities, which have higher gender education gap and female labor force participation. Nicodemo (2009) based on European household panel data finds that the existence of a sticky floor and declining glass ceiling effect and discrimination dominating the characteristic effect.&nbsp;

2016 Annual Meeting

Gender Wage Inequality Among Internal Migrants: Evidence from India

The impact of labour regulations on economic activity and formal sector job growth has been an issue of considerable interest in academic as well as policy circles in the Indian context. Two characteristic features of this debate stand out: first, the relative overemphasis on select aspects of labour regulations pertaining to job security provisions (in particular, the Chapters V-A and V-B of the Industrial Disputes Act, 1947 (IDA)); second, the relative under emphasis on the extent and nature of compliance with the labour regulations. The focus on select labour laws pertaining to job security provisions, such as the IDA, has come at the cost of a relative neglect of the impact of other labour regulations on worker welfare that, given their lower firm size thresholds combined with the preponderance of small sized firms in the Indian economy, affect a much larger set of firms and workers employed in them. But before we look at the impact of labour regulations, it is pertinent to ask the extent to which these regulations are complied with, so that the debate on their impact is situated in ground realities. Given that regulations are weakly enforced in developing countries such as India, it is surprising that there has not been an adequate emphasis on arriving at the estimates of non-compliance with India’s labour laws. In this essay, we look at compliance with an important labour regulation pertaining to workers’ social security: the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF). Under this, establishments employing 20 or more workers are mandated to provide contributions towards the provident fund of those employees whose wages are below a certain threshold. We focus on the EPF for the following reasons: first, unlike the IDA or the Factories’ Act 1948 which are applicable only to the manufacturing sector, the EPF has a wider coverage in terms of sectors of work; second, the government's recent initiatives on EPF, in the form of subsidizing employers' contributions, demonstrate its belief in the scheme's potential to be an important tool for delivering social security to workers. Moreover, jobs with social security form the basis for achieving ‘decent work for all’, a key sustainable development goal adopted by the United Nations. Since 2004-05, the National Sample Surveys on Employment and Unemployment (NSS) have captured workers’ self-reported data on access to various social security provisions, including provident fund contributions by the employers. Our estimates from this data suggest that the evasion of the EPF Act is quite widespread: in 2011-12, 75 percent (6.6 million) of regular salaried employees earning wages below the threshold and working in establishments employing 20 or more workers have reported to be not receiving provident fund benefits. This has increased sharply from 46 percent (4.5 million) in 2004-05. These individuals constitute about 10 percent of the total workforce employed in regular salaried jobs, in the respective years. We find that lack of written job contracts is an important correlate of non-compliance with the Act. We discuss various pathways that might lead to this correlation and suggest avenues for future research.

India Development Report

Labour Regulations and Worker Welfare: The Case of Provident Fund in India

This paper develops a model of inter-regional competition for mobile capital considering that regions may have different revenue-orientations. It shows that, if regions are asymmetric in terms of revenue-orientation, the less revenue-orientated region obtains higher tax-revenue and higher social welfare in the equilibrium than the more revenue-oriented region. However, if regions are symmetric, the equilibrium tax- revenue and social welfare are higher in the case of greater revenue-orientation of regions. Moreover, regions spend on public-investment and end up with Pareto-inferior equilibrium outcome, regardless of whether regions are symmetric or asymmetric. It also analyses implications of public-investment spillover on equilibrium outcomes.

Indian Economic Review

Competition for Foreign Capital under Asymmetric Revenue-Orientation

With an urbanization level of 31.16 percent in 2011, India is the least urbanized country among the top 10 economies of the world. In addition, unlike other countries, the transition of workforce out of agriculture is incomplete. This coupled with jobless growth in recent years has contributed to an increase in certain migration streams. While rural-rural migration continues to be the largest in terms of magnitude, we also document an increase in two-way commuting across rural and urban areas. Further, there are a large number of short term migrants and an increase in return migration rate is also observed.