The Demand for Services in India. A Mirror Image of Engel's Law for Food?
AbstractIndia's development experience over the past fifty years suggests that the increasing importance of the services sector deserves analysis.� The literature on structural change has emphasised changing patterns of demand as an explanation for the increasing importance of the services sector.� In order to establish the significance of private final demand as an explanation for the increasing importance of the services sector in India, this paper estimates Engel curve-type relationships for six categories of services: education, health, entertainment, personal, communication and transport.� In doing so, it uses Tobit and censored quantile regressions to analyse household survey data in 1993-94 and 2004-05.� We find upward sloping Engel curves which implies that there is a consistent increase in the household budget share allocated to services in the aggregate and to each individual services category as total household expenditure increases.� This is a powerful explanation for the increasing share of the services sector.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 451.
Date of creation: 01 Sep 2009
Date of revision:
Services; India; Demand; Engel curves; Luxuries; Household survey data;
Find related papers by JEL classification:
- C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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