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How does poverty decline? Evidence from India, 1983-1999

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Author Info
Mukesh Eswaran () (University of British Columbia)
Ashok Kotwal () (University of British Columbia)
Bharat Ramaswami () (Indian Statistical Institute, New Delhi)
Wilima Wadhwa () (University of California)

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Abstract

This paper attempts to assess the relative contributions of the farm and non-farm sectors to the increase in agricultural wage earnings in India between 1983-1999. Cross-section analysis of NSS data for 1983 and 1993 confirm the importance of farm productivity growth, consistent with the predictions of our theoretical model. A counterfactual exercise that attempts to estimate the relative contribution of the non-farm sector to the increase in the agricultural wage earnings during the period 1983-1999 suggests that this figure is no more than 25 at the all-India level, though it is higher in some states. Thus the bulk of the growth in wage earnings and the attendant decline in poverty during this period appears to be due to the farm sector.

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Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 07-05.

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Length: 45 pages
Date of creation: Mar 2007
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Handle: RePEc:ind:isipdp:07-05

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Related research
Keywords: Farm and non-farm productivity growth; non-farm employment; poverty; wage earnings;

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Find related papers by JEL classification:
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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  1. Petia Topalova, 2005. "Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts," NBER Working Papers 11614, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Timothy Besley & Robin Burgess, 2002. "The Political Economy Of Government Responsiveness: Theory And Evidence From India," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1415-1451, November. [Downloadable!] (restricted)
    Other versions:
  3. Angus Deaton & Alessandro Tarozzi, 2000. "Prices and poverty in India," Working Papers 213, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies.. [Downloadable!]
  4. Robin Burgess & Rohini Pande, 2005. "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," American Economic Review, American Economic Association, vol. 95(3), pages 780-795, June. [Downloadable!]
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  5. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, Oxford University Press, vol. 10(1), pages 1-25, January.
  6. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December. [Downloadable!] (restricted)
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  7. Eswaran, Mukesh & Kotwal, Ashok, 1993. "A theory of real wage growth in LDCs," Journal of Development Economics, Elsevier, vol. 42(2), pages 243-269, December. [Downloadable!] (restricted)
  8. Foster, Andrew D & Rosenzweig, Mark R, 2004. "Agricultural Productivity Growth, Rural Economic Diversity, and Economic Reforms: India, 1970-2000," Economic Development and Cultural Change, University of Chicago Press, vol. 52(3), pages 509-42, April.
  9. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 91-134, February. [Downloadable!] (restricted)
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  10. Timothy Besley & Robin Burgess, 2003. "Halving Global Poverty," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 3-22, Summer. [Downloadable!] (restricted)
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