Spatial Income Inequality in India, 1993-2011: A District Level Decomposition

Abstract

Using nationally representative household survey data, and district and state as two levels of aggregation, we examine role of individual and geographical factors in determining the level and the change in income inequality in India. We find that between-state income differences account for the majority of between-district income inequality in rural India in 2011. However, in urban India within-state income differences explain most of the between-district inequality in 2011. We also find that the between-district component accounts for one-third of the increase in total income inequality in rural India between 1993 and 2011. We find significantly smaller level of inequality but similar trends using the consumption expenditure data.

Keywords: Income Inequality, Regional Inequality, India

JEL Classification: I30, I32