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Manufacturing Activity and Inequality in India

Author

Listed:
  • Balu Pawde

    (Indian Institute of Technology Bombay
    Gokhale Institute of Politics and Economics)

  • Tara Shankar Shaw

    (Indian Institute of Technology Bombay)

  • Pushpa L. Trivedi

    (Shiv Nadar University)

Abstract

We examine the relationship between manufacturing activity and inequality in India at the district level. Our inequality measures are defined on both consumption expenditure and earnings. The measures of manufacturing activity are based on district-level manufacturing activities. Controlling for district-level fixed effects, we show that there exists a U-shaped association between manufacturing activity and inequality, implying that inequality first decreases and then increases following the growth of manufacturing activity. In the attribution exercise, we observe that this relationship between manufacturing activity and inequality operates through the employment channel. Our results are robust to the alternative measures of manufacturing activity and inequality and to alternative estimation where we control for the spatial correlation across the districts.

Suggested Citation

  • Balu Pawde & Tara Shankar Shaw & Pushpa L. Trivedi, 2024. "Manufacturing Activity and Inequality in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 22(4), pages 911-944, December.
    • Handle: RePEc:spr:jqecon:v:22:y:2024:i:4:d:10.1007_s40953-024-00416-8
    DOI: 10.1007/s40953-024-00416-8
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    More about this item

    Keywords

    Manufacturing industry; Inequality; Spatial models; Regional inequality;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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