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Does financial development increase rural-urban income inequality? Cointegration analysis in the case of Indian economy

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  • Tiwari, Aviral Kumar
  • Shahbaz, Muhammad

Abstract

The aim of paper is to investigate the affect of financial development on rural-urban income inequality in India over the period of 1960-2008. In doing so, ARDL bounds testing approach was applied to examine cointegration and Ng-Perron unit root test to check the order of integration of the variables. The results confirmed the existence of cointegration showing long run relationship among the test variables. Furthermore, empirical evidence indicated that financial development, economic growth and consumer prices increase gap between rural-urban earnings. The present study has opened new sights for policy making authorities to implement appropriate economic policies to reduce the rural-urban income inequality in India.

Suggested Citation

  • Tiwari, Aviral Kumar & Shahbaz, Muhammad, 2010. "Does financial development increase rural-urban income inequality? Cointegration analysis in the case of Indian economy," MPRA Paper 27093, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27093
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    References listed on IDEAS

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    Cited by:

    1. Amarante, Veronica, 2009. "Income Inequality and Economic Growth in Latin America," Economics PhD Theses 0109, Department of Economics, University of Sussex Business School.

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    More about this item

    Keywords

    Financial development; Rural-urban inequality; India; ARDL.;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G00 - Financial Economics - - General - - - General

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