Growth, Structural Change, and Poverty Reduction: Evidence from India
AbstractWe examine the relationship between growth in labor productivity and poverty reduction through the lens of changes in the structure of output and employment. Combining state-level data from India on poverty with state-level data on output and employment for 11 production sectors over 1987–2009, we find that the movement of workers from lower to higher productivity sector is an important channel through which increases in aggregate productivity translate into poverty reduction. We also find that the importance of this channel of productivity growth, termed structural change by recent literature, varies across states. Exploratory analysis reveals that indicators of financial development, business regulations that promote competition and flexible labor regulations are associated with larger reallocations of labor from lower to higher productivity sectors. Overall, our findings are consistent with the view that a better investment climate is not only good for business, it is also an important means for making growth more pro-poor in a labor abundant country.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 55247.
Date of creation: Apr 2014
Date of revision:
Labour productivity; Structural change; Poverty reduction;
Find related papers by JEL classification:
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
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