# Inequality in consumption expenditure at household level in Uttar Pradesh: Regression Based Inequality Decomposition (RBID)

Keywords:
Consumption Expenditure, Inequality, Regression Based Inequality Decompositions

### Abstract

The present study focuses on the Regression based inequality decomposition at household level consumption expenditure in Uttar Pradesh using NSSO 62nd, 63rd and 64th rounds of unit level data. An attempt has been made to measure the inequality decomposition based on regression analysis developed by Morduch and Sicular (2002), Fields (2003) and Fiorio and Jenkins (2007). The variables used for the decomposition based on regression for AMPCE are age of the head of households, gender of the head of households, marital status of the head of households, education level of the head of households, household size, household type, religion, social group, land possession, dwelling unit, type of structure, primary source of energy for cooking, primary source of energy for lighting and sector (Rural and Urban). Regression result shows that coefficient of education of the head of households followed by household size and type of household, social group and energy for light significant. Education level of the head of household is contributing as main factor for inequality followed that size of household and region (rural or urban). Regression based inequality decomposition reveals that in society there is urgent need for the enhancement in government expenditure in Uttar Pradesh on education especially in technical and higher level of education.### References

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Epo, B., N, Baye, F., M and Manga. N., A., T, (2010), “Explaining Spatial and Intertemporal sources of Poverty, Inequality and Gender Disparities in Cameroon: A Regression-Based Decomposition Analysis”, Poverty and Economic Policy (PEP) Research Network, Research project No. 11321, June 2010, www.pep-net.org.

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Kimhi, A., (2007), “Regression-Based Inequality Decomposition: A Critical review and Application to Farm-Household Income Data”, Agricultural Economics Department, The Hebrew University, Israel.

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NSSO, (2005), “Household Consumer expenditure in India”, National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

NSSO, (2005), “Note on Sample Design and Estimation Procedure: 62nd Round”, National Sample Survey Organisation, Survey Design Research Division, March.

NSSO, (2006), “Note on Sample Design and Estimation Procedure: 63rd Round”, National Sample Survey Organisation, Survey Design Research Division, March.

NSSO, (2006), “Press not on Household consumer expenditure in India, 2006-07”, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation, Government of India, New Delhi.

NSSO, (2007), “Household Consumption of Various Goods and Services in India”, 2004/05 National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

NSSO, (2007), “Note on Sample Design and Estimation Procedure: 64th Round”, National Sample Survey Organisation, Survey Design Research Division, March.

NSSO, (2008), “Household Consumer expenditure in 2006/07”, National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

Oaxaca, R., (1973), “Male-Female Wage Differences in Urban Labour Markets” International Economic Review, vol 14 no 3, pp 693-709.

Oyekale, A.S, A.I., Adeoti and Oyekale, T.O., (2007), “Regression-Based Approach to Income Inequality Decomposition in Rural and Urban Nigeria”, International Journal of Economic Perspective, vol 1, no 2, pp 45-54.

Sen, A. K., (1973), “Poverty, Inequality and Unemployment: Some conceptual issues in Measurement”, in Poverty and Income Distribution in India, e.d. T. N. Srinivasan and P.K. Bardhan, Statistical Publishing Society, Calcutta.

Shorrocks, A. F., (1980), “The Class of Additively Decomposable Inequality Measures”, Econometrica, vol. 48, pp. 613–625.

Shorrocks, A. F., (1984), “Inequality decompositions by population subgroups”, Econometrica vol. 52 no. 6, pp. 1369-88.

Shorrocks, A.F., (1982), “Inequality Decomposition by Factor Components” Econometrica, vol. 65, pp.177-207.

Shorrocks, A.F., (1999), “Decomposition procedure for Distribution Analysis: A unified Framework Based on Shapely value”, University of Essex and Institute for Fiscal studies, Colchester, England.

STATA 11.0, (2011), “ineqrbd help and ado file”, http://www.stata.com

Wan, G.H. and Z.Y. Zhou, (2005), “Income Inequality in Rural China: Regression-Based Decomposition Using Household Data”, Review of Development Economics, vol. 9, pp 107-20.

Wan, G.H., (2002), “Regression-Based Inequality Decomposition: Pitfalls and a Solution Procedure” UNU-WIDER Discussion Paper No. 2002/101, Helsinki.

Wan, G.H., (2004), “Accounting For Income Inequality in Rural China: A Regression-Based Approach”, Journal of Comparative Economics, vol 32, no. 2, pp 348-63.

Yuko, A., J.M. Kim. and Kimhi, A., (2006) “Determinants of Income Inequality among Korean Farm Households” Economic Research Centre, Discussion paper, No. 161, School of Economics, NAGOYA University.

Annual Plan, (2010-11), Planning Department, Government of Uttar Pradesh http://planning.up.nic.in/documents.htm

Annual Plan, (2009-10), Planning Department, Government of Uttar Pradesh http://planning.up.nic.in/documents.htm

Annual Plan, (2008-09), Planning Department, Government of Uttar Pradesh http://planning.up.nic.in/documents.htm

Sankhyikiya Diary, (2011), Economics and Statistics Division, Directorate of Economics and Statistics, Government of Uttar Pradesh, http://updes.up.nic.in.

Uttar Pradesh-Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Uttar_Prades

Annual Report 2011-12, Ministry of Power, Government of India, New Delhi.

Basic Statistical Returns of Scheduled Commercial Banks in India, (2012), Reserve Bank of India, Mumbai.

PHD Research Bureau, (2011), “Uttar Pradesh : The State Profile”, PHD Chamber of Commerce and Industry, New Delhi.

Atkinson, A., (1970), “The Economics of Inequality”, Oxford University Press, Delhi.

Atkinson, Antony B., (1998), “Poverty in Europe”, Oxford University Press, Blackwell.

Bardham, B., and S., Boucher, (1998), “Mitigation, Remittances and inequality: Estimating the Net effects of Migration on Income Distribution”, Journal of Economics, vol 55, pp 307-331.

Baye F. M. And Epo B N. (2011), “Inequality Decomposition by Regressed-Income Sources in Cameroon1”, Paper Prepared for the Special IARIW-SSA Conference on Measuring National Income, Wealth, Poverty, and Inequality in African Countries Cape Town, South Africa.

Blinder, A.S., (1973), “Wage Discrimination: Reduced Form and Structural Estimates”, Journal of Human Resources, vol. 8, pp 436-55.

Bourguignon, F., (1979), “Decomposable income inequality measures”, Econometrica vol. 47, pp. 901-920.

Bourguignon, F., M. Fournier and M. Gurgand, (2001), “Fast Development with a stable Income Distribution: Taiwan, 1979-1994”, Review of Income and Wealth, vol. 47, no,2, pp 139-63.

Cain, J. Salcedo, Rana Hasan, Rhoda Magsombol, and Aja y Tandon (2008), “Accounting for Inequality in India: Evidence from Household Expenditures”, ERD Working Paper No. 117, Asian Development Bank

Cowell, F. A., (1980), “On the structure of additive inequality measures”, Review of Economic Studies vol. 47, pp. 521.531.

Cowell, F.A. and Fiorio, C.V., (2006), “Rethinking Inequality Decomposition: Comment” Distributional Analysis Research Programme Working Paper 82, STICERD, London School of Economics, London, http://sticerd.lse.ac.uk/dps/darp/DARP82.pdf

Cowell, F.A. and Kuga,K., (1981), “Additivity and the entropy concept: an axiomatic approach to inequality measurement”, Journal of Economic Theory vol. 25, no. 1, pp. 131-43.

Das, T. and Parikh, A., (I982), “Decomposition of inequality measures and a comparative analysis”, Empirical Economics, vol. 7, pp. 23-48.

Deaton, A., (1997), “The Analysis of Household Surveys”, John Hopkins University Press, Baltimore.

DiNardo, J., N.M. Fortin and T. Lemiux, (1996), “Labour Market Institution and the Distribution of Wages, 1973-1992: A semi-parametric Approach”, Econometrica, vol. 64 no 5, pp 1001-44.

Epo, B., N, Baye, F., M and Manga. N., A., T, (2010), “Explaining Spatial and Intertemporal sources of Poverty, Inequality and Gender Disparities in Cameroon: A Regression-Based Decomposition Analysis”, Poverty and Economic Policy (PEP) Research Network, Research project No. 11321, June 2010, www.pep-net.org.

Fields, G., (2003), “Accounting for Income Inequality and Its Change: A New Method, with Application to the Distribution of Earnings in the United States”, Research in Labor Economics.

Fiorio, Carlo V., and Jenkins, Stephen P., (2007), “ineqrbd: Regression-based inequality decomposition, following Fields (2003), Motivation Model ineqrbd Example: wage inequality” UKSUG, http://www.stata.com/meeting/13uk/fiorio_ineqrbd_UKSUG07.pdf

Heshmati A., (2004), “A review of Decomposition Income Inequality”, IZA Discussion Paper No. 1221.

Heshmati A., (2006), “The World Distribution of Income and Income Inequality: A Review of the Economics Literature”, Journal of World Systems Research, vol XII, no. I, pp 61-107.

Houthakker, H.S., (1957), “An International Comparison of Household Expenditure Patterns, Commemoration the Centenary of Engel´s Law” Econometrica, Volume 25, Issue 4, S. 532-551.

Juhn, C., K. Murphy and Pierce B., (1993), “Wage Inequality and the Rise in Returns to Skill” Journal of Political Economy.

Kakwani, N.,(1980), “On a Class of Poverty Measures”, Econometrica, vol 48, pp 437-446.

Kimhi, A., (2007), “Regression-Based Inequality Decomposition: A Critical review and Application to Farm-Household Income Data”, Agricultural Economics Department, The Hebrew University, Israel.

Lerman, Robert I., and Yitzhaki. S., (1985), “Income Inequality Effects by Income Source: A New Approach and Applications to the United States”, Review of Economics and Statistics, vol 67, pp. 151-156.

Mishra, Padmaja & Parikh, A., (1992), “Household Consumer Expenditure Inequalities in India: A Decomposition Analysis”, Review of Income and Wealth, Blackwell Publishing, vol. 38(2), pages 225-36.

Mookherjee, Dilip & Shorrocks, Anthony F, (1982), “A Decomposition Analysis of the Trend in UK Income Inequality”, Economic Journal, Royal Economic Society, vol 92, no368, pp 886-902.

Morduch, J. and Sicular T., (2002), “Rethinking Inequality Decomposition with Evidence from Rural China”, Economic Journal, vol 112 (January), pp 93-106.

NSSO, (2001), “Consumption of some important commodities in India”, National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

NSSO, (2005), “Household Consumer expenditure in India”, National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

NSSO, (2005), “Note on Sample Design and Estimation Procedure: 62nd Round”, National Sample Survey Organisation, Survey Design Research Division, March.

NSSO, (2006), “Note on Sample Design and Estimation Procedure: 63rd Round”, National Sample Survey Organisation, Survey Design Research Division, March.

NSSO, (2006), “Press not on Household consumer expenditure in India, 2006-07”, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation, Government of India, New Delhi.

NSSO, (2007), “Household Consumption of Various Goods and Services in India”, 2004/05 National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

NSSO, (2007), “Note on Sample Design and Estimation Procedure: 64th Round”, National Sample Survey Organisation, Survey Design Research Division, March.

NSSO, (2008), “Household Consumer expenditure in 2006/07”, National Sample Survey Organization, Ministry of Statistics and Program Implementation, Govt. of India.

Oaxaca, R., (1973), “Male-Female Wage Differences in Urban Labour Markets” International Economic Review, vol 14 no 3, pp 693-709.

Oyekale, A.S, A.I., Adeoti and Oyekale, T.O., (2007), “Regression-Based Approach to Income Inequality Decomposition in Rural and Urban Nigeria”, International Journal of Economic Perspective, vol 1, no 2, pp 45-54.

Sen, A. K., (1973), “Poverty, Inequality and Unemployment: Some conceptual issues in Measurement”, in Poverty and Income Distribution in India, e.d. T. N. Srinivasan and P.K. Bardhan, Statistical Publishing Society, Calcutta.

Shorrocks, A. F., (1980), “The Class of Additively Decomposable Inequality Measures”, Econometrica, vol. 48, pp. 613–625.

Shorrocks, A. F., (1984), “Inequality decompositions by population subgroups”, Econometrica vol. 52 no. 6, pp. 1369-88.

Shorrocks, A.F., (1982), “Inequality Decomposition by Factor Components” Econometrica, vol. 65, pp.177-207.

Shorrocks, A.F., (1999), “Decomposition procedure for Distribution Analysis: A unified Framework Based on Shapely value”, University of Essex and Institute for Fiscal studies, Colchester, England.

STATA 11.0, (2011), “ineqrbd help and ado file”, http://www.stata.com

Wan, G.H. and Z.Y. Zhou, (2005), “Income Inequality in Rural China: Regression-Based Decomposition Using Household Data”, Review of Development Economics, vol. 9, pp 107-20.

Wan, G.H., (2002), “Regression-Based Inequality Decomposition: Pitfalls and a Solution Procedure” UNU-WIDER Discussion Paper No. 2002/101, Helsinki.

Wan, G.H., (2004), “Accounting For Income Inequality in Rural China: A Regression-Based Approach”, Journal of Comparative Economics, vol 32, no. 2, pp 348-63.

Yuko, A., J.M. Kim. and Kimhi, A., (2006) “Determinants of Income Inequality among Korean Farm Households” Economic Research Centre, Discussion paper, No. 161, School of Economics, NAGOYA University.

Annual Plan, (2010-11), Planning Department, Government of Uttar Pradesh http://planning.up.nic.in/documents.htm

Annual Plan, (2009-10), Planning Department, Government of Uttar Pradesh http://planning.up.nic.in/documents.htm

Annual Plan, (2008-09), Planning Department, Government of Uttar Pradesh http://planning.up.nic.in/documents.htm

Sankhyikiya Diary, (2011), Economics and Statistics Division, Directorate of Economics and Statistics, Government of Uttar Pradesh, http://updes.up.nic.in.

Uttar Pradesh-Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Uttar_Prades

Annual Report 2011-12, Ministry of Power, Government of India, New Delhi.

Basic Statistical Returns of Scheduled Commercial Banks in India, (2012), Reserve Bank of India, Mumbai.

PHD Research Bureau, (2011), “Uttar Pradesh : The State Profile”, PHD Chamber of Commerce and Industry, New Delhi.

Published

11-07-2013

How to Cite

*Journal of Global Economy*,

*9*(2). Retrieved from http://www.rcssindia.org/jge/index.php/jge/article/view/135-152

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