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Decomposition of inter-regional poverty gap in India: a spatial approach

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  • Somnath Chattopadhyay
  • Amita Majumder
  • Hasanur Jaman

Abstract

This paper examines the impact of various socio-economic factors on consumption in rural West Bengal, an eastern state of India, using a regression-based technique reformulated in a spatial framework. The difference of incidences of poverty (head count ratios) in two parts (North and South) of rural West Bengal is then decomposed using the familiar Oaxaca decomposition methodology into an aggregate characteristics effect, which is interpreted as a resource effect and an aggregate coefficients effect, which is interpreted as an efficiency effect. An important observation from the present analysis is that the poorer North Bengal has a scarcity in terms of availability of characteristics (resources) compared to that in South Bengal and the resource scarcity in North Bengal is the dominant factor causing the poverty gap between the two parts of West Bengal. Thus, attention needs to be paid to North Bengal with respect to enhancement of important policy variables like education level, Government aid, and employment opportunities. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Somnath Chattopadhyay & Amita Majumder & Hasanur Jaman, 2014. "Decomposition of inter-regional poverty gap in India: a spatial approach," Empirical Economics, Springer, vol. 46(1), pages 65-99, February.
    • Handle: RePEc:spr:empeco:v:46:y:2014:i:1:p:65-99
    DOI: 10.1007/s00181-013-0683-8
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    More about this item

    Keywords

    Poverty; Oaxaca decomposition; Spatial regression; C21; I32;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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