IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/6451.html
   My bibliography  Save this paper

Non-farm diversification, poverty, economic mobility and income inequality : a case study in village India

Author

Listed:
  • Himanshu
  • Lanjouw, Peter
  • Murgai, Rinku
  • Stern, Nicholas

Abstract

This paper assembles data at the all-India level and for the village of Palanpur, Uttar Pradesh, to document the growing importance, and influence, of the non-farm sector in the rural economy between the early 1980s and late 2000s. The suggestion from the combined National Sample Survey and Palanpur data is of a slow process of non-farm diversification, whose distributional incidence, on the margin, is increasingly pro-poor. The village-level analysis documents that the non-farm sector is not only increasing incomes and reducing poverty, but appears as well to be breaking down long-standing barriers to mobility among the poorest segments of rural society. Efforts by the government of India to accelerate the process of diversification could thus yield significant returns in terms of declining poverty and increased income mobility. The evidence from Palanpur also shows, however, that at the village-level a significant increase in income inequality has accompanied diversification away from the farm. A growing literature argues that such a rise in inequality could affect the fabric of village society, the way in which village institutions function and evolve, and the scope for collective action at the village level. Failure to keep such inequalities in check could thus undermine the pro-poor impacts from the process of structural transformation currently underway in rural India.

Suggested Citation

  • Himanshu & Lanjouw, Peter & Murgai, Rinku & Stern, Nicholas, 2013. "Non-farm diversification, poverty, economic mobility and income inequality : a case study in village India," Policy Research Working Paper Series 6451, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6451
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/05/20/000158349_20130520094922/Rendered/PDF/WPS6451.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Sattinger (ed.), 2001. "Income Distribution," Books, Edward Elgar Publishing, volume 0, number 2018, April.
    2. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841 Elsevier.
    3. Frank A. Cowell, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 521-531.
    4. Mukhopadhyay, Abhiroop, 2011. "Stepping out of Palanpur: employment outside Palanpur," LSE Research Online Documents on Economics 38373, London School of Economics and Political Science, LSE Library.
    5. Himanshu, Himanshu & Lanjouw, Peter & Mukhopadhyay, Abhiroop & Murgai, Rinku, 2011. "Non-farm diversification and rural poverty decline: a perspective from Indian sample survey and village study data," LSE Research Online Documents on Economics 38371, London School of Economics and Political Science, LSE Library.
    6. Lanjouw, Peter & Rao, Vijayendra, 2011. "Revisiting Between-Group Inequality Measurement: An Application to the Dynamics of Caste Inequality in Two Indian Villages," World Development, Elsevier, vol. 39(2), pages 174-187, February.
    7. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    8. Ashwini Deshpande, 2000. "Does Caste Still Define Disparity? A Look at Inequality in Kerala, India," American Economic Review, American Economic Association, vol. 90(2), pages 322-325, May.
    9. Ghazala Mansuri & Vijayendra Rao, 2013. "Localizing Development : Does Participation Work?," World Bank Publications, The World Bank, number 11859.
    10. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    11. Elbers, Chris & Lanjouw, Peter & Mistiaen, Johan A. & Ozler, Berk, 2005. "Re-interpreting sub-group inequality decompositions," Policy Research Working Paper Series 3687, The World Bank.
    12. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas Anthony (ed.), 2007. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-8664-5.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gaurav, Sarthak, 2015. "Are Rainfed Agricultural Households Insured? Evidence from Five Villages in Vidarbha, India," World Development, Elsevier, vol. 66(C), pages 719-736.
    2. Sanjoy Chakravorty & S. Chandrasekhar & Karthikeya Naraparaju, 2016. "Income generation and inequality in India's agricultural sector: The Consequences of land fragmentation," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-028, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Deininger, Klaus & Jin, Songqing & Liu, Yanyan & Singh, Sudhir, 2015. "Labor Market Performance and the Farm Size-Productivity Relationship in Rural India," 2015 Conference, August 9-14, 2015, Milan, Italy 212720, International Association of Agricultural Economists.
    4. Klaus Deininger & Songqing Jin & Yanyan Liu & Sudhir K. Singh, 2018. "Can Labor-Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India," Land Economics, University of Wisconsin Press, vol. 94(2), pages 239-258.
    5. Emran,M. Shahe & Sun,Yan - GSP05, 2015. "Are the children of uneducated farmers doubly disadvantaged ? farm, nonfarm and intergenerational educational mobility in rural China," Policy Research Working Paper Series 7459, The World Bank.
    6. Imai, Katsushi S. & Gaiha, Raghav & Thapa, Ganesh, 2015. "Does non-farm sector employment reduce rural poverty and vulnerability? Evidence from Vietnam and India," Journal of Asian Economics, Elsevier, vol. 36(C), pages 47-61.
    7. repec:spr:ijlaec:v:59:y:2016:i:2:d:10.1007_s41027-017-0052-9 is not listed on IDEAS
    8. Dang,Hai-Anh H. & Lanjouw,Peter F. & Swinkels,Robertus A & Dang,Hai-Anh H. & Lanjouw,Peter F. & Swinkels,Robertus A, 2014. "Who remained in poverty, who moved up, and who fell down ? an investigation of poverty dynamics in Senegal in the late 2000s," Policy Research Working Paper Series 7141, The World Bank.
    9. Tilche, Alice, 2016. "Migration, bachelorhood and discontent among the Patidars," LSE Research Online Documents on Economics 65860, London School of Economics and Political Science, LSE Library.
    10. Newman Carol & Kinghan Christina, 2015. "Economic transformation and the diversification of livelihoods in rural Viet Nam," WIDER Working Paper Series 064, World Institute for Development Economic Research (UNU-WIDER).
    11. Johny, Judit & Wichmann, Bruno & Swallow, Brent M., 2017. "Characterizing social networks and their effects on income diversification in rural Kerala, India," World Development, Elsevier, vol. 94(C), pages 375-392.
    12. repec:eee:jfpoli:v:75:y:2018:i:c:p:37-51 is not listed on IDEAS

    More about this item

    Keywords

    Rural Poverty Reduction; Regional Economic Development; Inequality; Labor Markets;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:6451. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.