Distributional change, income mobility and pro-poor growth: evidence from India

Abstract

The study of income inequality and income mobility has been central to understanding India’s recent economic development. This paper, based on the first two waves of the India Human Development survey data, addresses three questions namely; (a) examining recent trends and sources of income inequality and their sources in rural and urban India, (b) whether households belonging to different socio-occupational groups have grown together and thereby factors relating to dynamic income distribution and finally (c) provides an analytical framework within which changes in income inequality over time are related to the extent to which income growth is pro-poor and to the extent of income reranking or mobility. Our results show the equalizing effect of progressive income growth was more than offset by the disequalising effect of reranking in India during the study period resulting in income inequality both in the rural and urban area.

Keywords:

• Income inequality
• income mobility
• pro-poor growth
• India