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

Author

Listed:
  • Mukesh Eswaran

    () (University of British Columbia)

  • Ashok Kotwal

    () (University of British Columbia)

  • Bharat Ramaswami

    () (Indian Statistical Institute, New Delhi)

  • Wilima Wadhwa

    () (University of California)

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.

Suggested Citation

  • Mukesh Eswaran & Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2007. "How does poverty decline? Evidence from India, 1983-1999," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 07-05, Indian Statistical Institute, New Delhi, India.
  • Handle: RePEc:ind:isipdp:07-05
    as

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    File URL: http://www.isid.ac.in/~pu/dispapers/dp07-05.pdf
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    References listed on IDEAS

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    3. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters,in: Globalization and Poverty, pages 291-336 National Bureau of Economic Research, Inc.
    4. Gaurav Datt & Martin Ravallion, 2002. "Is India's Economic Growth Leaving the Poor Behind?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 89-108, Summer.
    5. Timothy Besley & Robin Burgess, 2002. "The Political Economy of Government Responsiveness: Theory and Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1415-1451.
    6. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 91-134.
    7. B.N.Goldar, 2004. "Productivity trends in Indian manufacturing in the pre- and post- reform periods," Indian Council for Research on International Economic Relations, New Delhi Working Papers 137, Indian Council for Research on International Economic Relations, New Delhi, India.
    8. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    9. Gaurav Datt & Martin Ravallion, 1998. "Farm productivity and rural poverty in India," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 62-85.
    10. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
    11. 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 509-542, April.
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    13. Praduman kumar & Anjani kumar & Surabhi Mittal, 2004. "Total Factor Productivity of Crop Sector in the Indo-Gangetic Plain of India: Sustainability issues revisited," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 39(1), pages 169-201, January.
    14. 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.
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    Cited by:

    1. Manisha Chakrabarty & Amita Majumder & Ranjan Ray, 2015. "Preferences, Spatial Prices and Inequality," Journal of Development Studies, Taylor & Francis Journals, vol. 51(11), pages 1488-1501, November.

    More about this item

    Keywords

    Farm and non-farm productivity growth; non-farm employment; poverty; wage earnings;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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