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Structural Change and Poverty Reduction at Sub-State Levels in India

Listed author(s):
  • Sen Gupta, Abhijit
  • More, Vishal
  • Gupta, Kanupriya

Over the last two decades India has witnessed a significant rise in growth rate compared to historical levels. In this study, we investigate the pattern and nature of growth, and its implication for poverty reduction in India. In particular, we focus on the extent to which, structural change defined as changes in the composition of the economy in terms of key sectors, their employment and productivity, has an impact on poverty reduction. The paper is first of its kind in focusing on these issue at the sub-state level, which is important given the large size of Indian states that mask a great deal of heterogeneity. Moreover, the paper focuses on alternate definitions of structural change, including for the first differentiating between productivity increases in India arising from workers moving into above average productivity level sectors from workers moving to sectors that are experiencing positive productivity growth. The paper finds that while improving sectoral productivity is important for poverty reduction, there is a strong link between shift of workers into sectors witnessing an increase in poverty and poverty reduction. Thus poverty reduction requires generating jobs in dynamic sectors that are witnessing productivity growth as well as imparting adequate skills to the workforce to make them employable in these sectors.

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File URL: https://mpra.ub.uni-muenchen.de/72740/1/MPRA_paper_72740.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 72740.

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Date of creation: Jul 2016
Handle: RePEc:pra:mprapa:72740
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  1. McMillan, Margaret & Rodrik, Dani & Verduzco-Gallo, Íñigo, 2014. "Globalization, Structural Change, and Productivity Growth, with an Update on Africa," World Development, Elsevier, vol. 63(C), pages 11-32.
  2. Dekle, Robert & Vandenbroucke, Guillaume, 2012. "A quantitative analysis of China's structural transformation," Journal of Economic Dynamics and Control, Elsevier, vol. 36(1), pages 119-135.
  3. World Bank, 2013. "World Development Report 2014
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  4. Gaaitzen de Vries & Marcel Timmer & Klaas de Vries, 2015. "Structural Transformation in Africa: Static Gains, Dynamic Losses," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 674-688, June.
  5. Verma, Rubina, 2012. "Can total factor productivity explain value added growth in services?," Journal of Development Economics, Elsevier, vol. 99(1), pages 163-177.
  6. Betts, Caroline & Giri, Rahul & Verma, Rubina, 2013. "Trade, Reform, And Structural Transformation in South Korea," MPRA Paper 49540, University Library of Munich, Germany.
  7. Timothy Besley & Robin Burgess, 2000. "Land Reform, Poverty Reduction, and Growth: Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 389-430.
  8. Felipe, Jesus & Dacuycuy, Connie & Lanzafame, Matteo, 2014. "The Declining Share of Agricultural Employment in the People’s Republic of China: How Fast?," ADB Economics Working Paper Series 419, Asian Development Bank.
  9. Andreas Dietrich, 2012. "Does growth cause structural change, or is it the other way around? A dynamic panel data analysis for seven OECD countries," Empirical Economics, Springer, vol. 43(3), pages 915-944, December.
  10. Fallon, Peter R. & Lucas, Robert E. B., 1993. "Job security regulations and the dynamic demand for industrial labor in India and Zimbabwe," Journal of Development Economics, Elsevier, vol. 40(2), pages 241-275, April.
  11. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  12. Sen, Kunal, 2016. "The Determinants of Structural Transformation in Asia: A Review of the Literature," ADB Economics Working Paper Series 478, Asian Development Bank.
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