Re-examination of convergence hypothesis among Indian states in panel stationarity testing framework with structural breaks

This article examines the conditional income convergence hypothesis for 17 major states in India for the period of 1960–2012. Univariate stationarity tests without structural breaks provide evidence against the convergence hypothesis. However, when two or more structural breaks are applied in per capita income series, the incomes of around 11–13 states are found to stochastically converge to the national average. This finding supports the convergence hypothesis for the panel as a whole after accounting for two data features, cross-sectional dependence and structural breaks in incomes, using a unified panel stationarity testing framework.     

Labour migration in a model of North-South trade

A dynamic general eqilibrium model of the world economy is adopted to examine the benefits and drawbacks of labour migration to each of the participatingregions. It is demonstrated that, especially in the long term, the migration of workers may be mutually beneficial: the region of immigration making production gains, while that of emigration perceives a higher demand for its products. In contrast to previous results, it is shown that no immigration limits would be imposed even if migrants' incomes were taxed and, indeed, differentiated payments to immigrants is suboptimal     

Tax efficiency in selected Indian states

This paper attempts to measure pure tax efficiency of fifteen major Indian states (Andhra Pradesh, Assam, Bihar, Haryana, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal) for the period 1980–81 to 1992–93 in a manner that allows this efficiency to vary both across time as well as across states. It is discovered that there is a moral hazard problem in the design of central grants in that higher grants by the central government to the state governments reduce efficiency of tax collection by these states. The less poor states are more efficient in tax collection. The rankings of states by tax efficiency for the various years do not converge. An index of aggregate tax efficiency is calculated and it appears that this index has been stagnating. It is argued that the weight placed on tax effort in the formula determining central grants to state governments should be increased to improve tax efficiency of state governments. First version received: November 1997/final version received: November 1998     

Growth performance of Indian states

This article is concerned with evaluating the growth performance of states in the Indian Federation. This was sought to be done by estimating growth equations for a group of 19 states in India as well as sub-groups of these states during the period from 1981–1982 to 2004–2005. It has been found that, systematically, the contribution of educational attainment (social sector capital) to the growth process is larger than the contribution of physical capital. An important concern in the article is whether growth regressions estimated for a large group of 19 states can be replicated for smaller sub-groups. The problem of parameter heterogeneity is investigated, and the results of this study show that there is considerable parameter heterogeneity in the growth equations across groups. Rates of convergence estimated in this article also vary from extremely low levels (in the absence of the education variable) to more than 10% (in the presence of the education variable). The results of this study thus point to the great importance of education in improving the growth performance of Indian states.     

Labour migration in the enlarged EU: a new economic geography approach

This paper studies the impact of migration policy liberalisation on international labour migration in the enlarged European Union (EU) in a structural economic geography approach. The liberalisation of migration policy would induce an additional 1.80–2.98% of the total EU workforce to change their country of location, with most of migrant workers relocating from the East to the West. The average net migration rate is decreasing in the level of integration, suggesting that from an economic point of view no regulatory policy responses are necessary to labour migration in the enlarged EU.     

Reexamining the permanent income hypothesis with uncertainty in permanent and transitory innovation states

In this paper, we reexamine the permanent income–consumption relationship analytically and empirically, based on the innovation regime-switching (IRS) model developed in [Kuan, C.M., Huang, Y.L., Tsay, R.S., 2005. An unobserved component model with switching permanent and transitory innovations. Journal of Business and Economic Statistics, 23, 443–454]. A novel feature of the IRS model is that it explicitly allows for uncertainty in innovation states. When the labor income follows an IRS process, it is shown that the agent’s perception on the likelihoods of income innovations being permanent and transitory plays a crucial role in determining the optimal forecasts on the change of consumption. The effect of a current labor income innovation on consumption is a weighted average of two distinct effects resulting from permanent and transitory innovations with the weights equal to the perceived likelihoods of the respective states. Also, past innovations may affect consumption when there are revisions in the perceived likelihoods of previous states. Our empirical study on US data shows that consumption indeed reacts significantly to the perceived likelihoods of innovation states. However, even after controlling for the effect of state uncertainty, we find consumption vastly underreacts to permanent innovations in labor income but reacts about the right magnitude to transitory ones when compared with the prediction of the permanent income hypothesis. This evidence is similar to [Elwood, S.K., 1998. Testing for excess sensitivity in consumption: A state-space unobserved components approach. Journal of Money, Credit, and Banking, 30, 64–82] but in sharp contrast with that found in [Hall, R.E., Mishkin, F.S., 1982. The sensitivity of consumption to transitory income: Estimates from panel data on households. Econometrica, 50, 461–480].     

Evidence of Wagner's law from Indian states

In this paper, we test for Wagner's law for 15 Indian states. We consider nine panels of states based on geography and level of economic development. Using panel unit-root, panel-cointegration, and panel-Granger causality analysis, we unravel strong evidence of Wagner's law. However, we find that the Wagner's law relationship is consumption rather than capital expenditure driven. This is a fresh revelation and our results are robust to different model specifications.     

Finance and inequality: a study of Indian states

Although a large literature exists on finance and economic growth, few studies have empirically examined the relationship between finance and inequality. Using grouped national household sample survey data on monthly household consumption expenditure at the sub-national level for the years 1999–2000 to 2006–2007, we examine the relationship between Financial Development (FD) and rural and urban inequality in India. The results indicate that FD is associated with a reduction in inequality, but only in the urban areas. Further, inequality is found to be higher in the richer states compared to less developed and low income states, and as state income increases, inequality also increases both in the rural and urban areas. Finally, our results show that increase in population per bank branch leads to higher inequality in urban areas but decline in rural areas.     

Property tax and inter-municipal migration in canada: a multivariate test of the Tiebout hypothesis

This paper tests the causal ordering between property taxes and inter-municipal migration, using both bivariate and multivariate methods. Empirical results, based on annual data for post-war Canada (1940–84), support the Tiebout–Tullock hypothesis, which implies that differential local tax system and public services induce inter-comunity migration, inter alia. Local spending and taxation are not therefore fully capitalized in property values. The bivariate tests, based on the Granger–Sims test and Hsiao's procedure, indicate an instantaneous bidirectional causality between property taxes and migration but the multivariate Granger test supports only a unidirectional causality from property taxes to migration.     

Credible redistributive policies and migration across U.S. states

We ask whether worker mobility has undermined the ability of U.S. states to redistribute income. We build a tractable model where both migration decisions and redistribution policies are jointly determined. Our model features a large number of heterogeneous regions and skilled and unskilled workers with idiosyncratic migration costs. The calibrated model is able to account for the main features of interstate migration, as well as some qualitative features of the cross-sectional distribution of redistributive policies. We conduct a counterfactual experiment in order to isolate the effect of worker mobility on state-level redistributive policies. We find that migration has induced substantial convergence in tax rates across U.S. states, but no race to the bottom. Interestingly, the degree of convergence has been much lower for transfers due to an offsetting tax-base effect.     

The economics and politics of output volatility: evidence from Indian states

Employing data for 1981–2009, this paper examines the factors influencing the volatility of state output, using India as a case study. The analysis appears to suggest that high income states exhibit relatively higher output volatility. At the state-level, the proximate determinants of a decline in output volatility can be traced to financial deepening, government expenditures and institutional quality. Also, state-level political factors are also found to play an important role. In addition, at the macroeconomic level, monetary policy considerations are observed to be the most important factor impacting output volatility.     

Holidays and economic growth: Evidence from a panel of Indian states

The number of holidays differs significantly across Indian states. Moreover, some of the governing political parties have been accused of using holidays as a tool either to mollify disgruntled workers or to woo voters before the state elections. In this context, this paper explores the relationship between the number of holidays and economic growth across 24 Indian states, spanning the period 2008–2016, by employing a panel model analysis. The paper presents evidence suggesting that holidays seem to affect growth negatively in the rich states but are inconsequential for the growth performance of the poor states.     

Determinants of Child Labour in Indian States: Some Empirical Explorations (19612–1991)

This paper attempts to examine the phenomenon of child labour in India by conducting a preliminary search for the factors which affect demand and supply of child labour. The incidence of child labour is firstly examined with respect to the socio economie characteristics including dernographic, educational and economie poverty variables. Factor analysis is then conducted to identify patterns of these variables with the incidence of child labour for Indian states using Census data. These possible relationships are formally modelled in an overlapping generations framework which derives two postulated models. The models are estimated using Kmenta’s pooled method which combines variations due to time and state specific factors. These results clearly indicate the presence of vicious and virtuous spirals consisting of the above factors for different states. The supply factors appear to dominate and their roles require further indepth examination

     

深化对劳动和劳动价值论的认识

《中共中央关于制定国民经济和社会发展第十个五年计划的建议》(以下简称《建议》)中关于收入分配问题的主要内容是 :在鼓励资本、技术等生产要素参与收入分配 (按劳分配与按生产要素分配相结合 )的基础上 ,进一步提出“随着生产力的发展 ,科学技术工作和经营管理作为劳动的重要形式 ,在社会生产力起着越来越重要的作用” ,并据以建立健全收入分配的激励机制和约束机制 ,对企业领导人和科技骨干实行年薪制和股权、期权试点。后来朱基在关于《建议》的《说明》中指出 :“收入分配问题是新形势下需要着力解决好的重大课题” ,要解决好这个课…     

India shining and Bharat drowning: Comparing two Indian states to the worldwide distribution in mathematics achievement

Increasing evidence suggests that the level and distribution of cognitive skills is more important to economic development than absolute measures of schooling attainment, and that income and skill inequality are inextricably linked. Yet for most of the developing world no internationally comparable estimates of cognitive skills exist. This paper uses student answers to publicly released questions from an international testing agency together with statistical methods from Item Response Theory to place secondary students from two Indian states—Orissa and Rajasthan—on a worldwide distribution of mathematics achievement. These two states fall below 43 of the 51 countries for which data exist. The bottom 5% of children rank higher than the bottom 5% in only three countries—South Africa, Ghana and Saudi Arabia. But not all students test poorly. Inequality in the test-score distribution for both states is next only to South Africa. The combination of India's size and large variance in achievement give both the perceptions that India is shining even as Bharat, the vernacular for India, is drowning. How India's development unfolds will depend critically on how the skill distribution evolves and how low- and high-skilled workers interact in the labor market.     

Natural resource accounting for Indian states — Illustrating the case of forest resources

Our main objective is to set out and apply a SEEA-based methodology to reflect the true value of forest resources in India's national and state accounts. We establish that a “top-down” approach using available national databases is both feasible and desirable from a policy perspective. In this paper, we address four components of value creation in forests: timber production, carbon storage, fuelwood usage, and the harvesting of non-timber forest products. The results of our analysis suggest that prevailing measures of national income in India underestimate the contribution of forests to income. The income accounts of the Northeastern states in particular are significantly understated by these traditional (GDP/GSDP) measures. We are also able to identify some states which performed poorly in the context of our sustainability framework, reflecting natural capital losses due to degradation and deforestation. Our results highlight the need to integrate natural resource accounting into the national accounting framework in order to generate appropriate signals for sustainable forest management and for the conservation of forest resources which are widely used by the poor in India, as well as being significant stores of national wealth.     

Efficiency and Equality in the Labour Market

I review theoretical arguments suggesting that certain labourmarket institutions can be justified for economic efficiencyreasons. In models with intrinsic market failures, "rigidities"like employment protection legislation and institutional wagecompression may push the economy closer to the efficient frontier.I discuss recent empirical evidence on income inequality, povertyand income mobility in OECD countries, and I conclude that thewelfare states of Northern Europe score relatively well on allcounts. Finally, I discuss labour market reforms that may improveefficiency without violating European voters' preference forequality.(JEL H30, J30, J50)