Inequality and Locational Determinants of the Distribution of Living Standards in India

Using 2011-12 consumption micro-data, we find that nearly one-third of the variation in living standards India can be explained by location alone. Consumption levels and locational inequality are positively related. In effect, from an individual’s perspective, higher richer, but more unequal, locations India. The central factor behind these findings is large difference average between rural urban continued divergence per-capita incomes rich poor states. Our results provide a possible explanation for persistence economic migration to areas within fast-growing emerging economy. While individuals cannot easily alter specific characteristics like their caste or religion, they have some freedom change enjoy better standards.