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Convergence clubs in incomes across Indian states: is there evidence of a neighbours’ effect?

Bandyopadhyay, Sanghamitra (2012) Convergence clubs in incomes across Indian states: is there evidence of a neighbours’ effect? Economics Letters, 116 (3). pp. 565-570. ISSN 0165-1765

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Identification Number: 10.1016/j.econlet.2012.05.050

Abstract

I examine the distribution dynamics of incomes across Indian states using the entire income distribution. Unlike standard regression approaches, this approach allows us to identify specific distributional characteristics such as polarisation and stratification. The period between 1965 to 1997 exhibits the formation of two convergence clubs: one at 50% and the other at 125% of the national average income. Income disparities across the states declined over the 1960s and then increased from the 1970s to the 1990s. I use the distribution dynamics method to further investigate a neighbours' effect, i.e.,whether states that cluster together are neighbouring states. The evidence obtained suggests that there is none. While this initially comes across as an unusual result, it strongly suggests that India being a developing country is yet to develop the required networks across the states to generate spatial interactions.

Item Type: Article
Official URL: http://www.journals.elsevier.com/economics-letters...
Additional Information: © 2012 Elsevier B.V.
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Date Deposited: 23 Aug 2012 09:21
Last Modified: 23 Aug 2012 09:21
URI: http://eprints.lse.ac.uk/id/eprint/45498

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