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Measuring changes in inequality helps determine the effectiveness of policies aimed at correcting inequality and generates the data necessary to use inequality as an explanatory variable in policy analysis. Income inequality per period and income mobility across periods can be pooled into one overall measure of multiple period inequality. This paper highlights some aspects of structural changes and examines its impact on economic mobility in Indian rural economy. We have used a unique Additional Rural Income Survey/Rural Economic & Demographic Survey (ARIS/REDS) surveys data set for rural India spanning 3 decades to determine the reasons and magnitude of income mobility. The triggers, that have been identified, include land ownership, affirmative action program and occupation. The income mobility continues to be low. Further, the land reforms and advantages from affirmative action programs have not made any significant impact on the income mobility for the rural households in India over the periods.
Keywords: Income Mobility, Measurement Error, Poverty, Primary Survey, Rural India
JEL Classification: D31, I32, D73, O12
(ProQuest: ... denotes formulae omitted.)
1. INTRODUCTION
Income inequality is prevalent in India. According to World Inequality Report, (2018), India is the second-most unequal country after Middle East in the world. It is recorded that in 2016, 58.4 percent of India's total wealth owned by only richest 1%Indian population. Further, the richest 10 percent population own 80.7 percent of the India's total wealth against 31 percent in 1980. There is no second opinion that income inequality has increased in nearly all countries during the last few decades, but, since 1980, income inequality has been increased drastically in India. Dispersion in income distribution of raises the level of poverty. In 2012, the Indian government stated 22 percent of its population is below its official poverty limit. Although during the period between 1973-74 and 1999-2000, the incidence of poverty has been declined from 54.9 percent to around 26 percent (Reserve Bank of India (RBI), 2012), the rate of reduction in poverty varied considerably during this period. There was a slowdown in the pace of poverty reduction in the early 1990s despite having steep economic growth.
Whereas, the last three decades have been a period of considerable economic growth in the economy; in particular, the spread of new agricultural technologies during...