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Inequality among the rural poor: A tale of two cities in India and Vietnam

  • Amy Y. C. Liu

Using the Survey of Living Conditions in Uttar Pradesh and Bihar of India and the second round of the Vietnam Living Standards Survey, this paper examines whether and to what extent rural consumption inequality of the poor differs in the two countries. While these two countries have experienced significant growth since the early 1990s, they have different institutional arrangements. As a result, the reforms that they have undertaken could have different impact on the poor. The Shapley decomposition results suggest that not only is average consumption expenditure per capita higher in rural Vietnam than in rural India, but also the distribution is more equitable. Land ownership and education structure are found to be the most important contributing factors of consumption inequality for the rural poor. However, the importance of these contributing factors differs. Land ownership (age structure) turns out to be the most important factor for India (Vietnam). Education is an important factor common to the poor in both countries. Policies to ensure more equal access to land and education hold the key to address consumption inequality for the poor.

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File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC09-04.pdf
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Paper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec09-04.

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Length: 35 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:idc:wpaper:idec09-04
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  1. Wan, Guanghua, 2004. "Accounting for income inequality in rural China: a regression-based approach," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 348-363, June.
  2. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
  3. Minot, Nicholas & Baulch, Bob, 2002. "The spatial distribution of poverty in Vietnam and the potential for targeting," MTID discussion papers 42, International Food Policy Research Institute (IFPRI).
  4. Vani K. Borooah, 2005. "Caste, Inequality, and Poverty in India," Review of Development Economics, Wiley Blackwell, vol. 9(3), pages 399-414, 08.
  5. Cowell, Frank A & Jenkins, Stephen P, 1995. "How Much Inequality Can We Explain? A Methodology and an Application to the United States," Economic Journal, Royal Economic Society, vol. 105(429), pages 421-30, March.
  6. Stanislav Kolenikov & Anthony Shorrocks, 2005. "A Decomposition Analysis of Regional Poverty in Russia," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 25-46, 02.
  7. Borooah, Vani K. & Gustafsson, Bjorn & Li, Shi, 2006. "China and India: Income inequality and poverty north and south of the Himalayas," Journal of Asian Economics, Elsevier, vol. 17(5), pages 797-817, November.
  8. Martin Ravallion & Dominique van de Walle, 2006. "Land Reallocation in an Agrarian Transition," Economic Journal, Royal Economic Society, vol. 116(514), pages 924-942, October.
  9. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
  10. Subramanian, S. & Jayaraj, D., 2006. "The Distribution of Household Wealth in India," Working Paper Series RP2006/116, World Institute for Development Economic Research (UNU-WIDER).
  11. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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