Rural-Urban Disparities in a Time of Growth Sudipta Ghosh 1 Viktoria - PowerPoint PPT Presentation

Rural-Urban Disparities in a Time of Growth Sudipta Ghosh 1 Viktoria Hnatkovska 1 Amartya Lahiri 2 1 University of British Columbia 2 CAFRAL and University of British Columbia July 2019

Introduction ◮ Process of development involves structural changes ◮ resource reallocation from agriculture to non-agriculture ◮ Process has distributional implications ◮ shrinking agricultural sector is primarily rural ◮ urban areas have comparative advantage in expanding sectors ◮ requires workers to change occupations ◮ Do rural workers lose out during the process?

This paper ◮ Study the experience of India since the 1980s: ◮ undergoing sectoral transformation ◮ experiencing rapid economic growth ◮ 800 million people living in rural areas ◮ Scale of transformation is massive

Agenda ◮ How have rural-urban disparities evolved in India? ◮ education attainment rates ◮ occupation distribution ◮ consumption expenditure ◮ Are aggregate patterns uniform across states ◮ How has growth contributed to these trends?

Micro-level data ◮ National Sample Survey (NSS) of India ◮ 6 rounds: R38 (1983), R43 (1987-88), R50 (1993-94), R55 (1999-00), R61 (2004-05), R66 (2009-10), R68 (2011-12) ◮ Include individuals in all male-led households who are ◮ 16 to 65 y.o. ◮ not enrolled in any education institutions ◮ have occupation and education information ◮ Sample size: 159,000 to 221,000 individuals per survey round

Education ◮ Education status reported as categories ◮ Two approaches ◮ Convert categories to years and compare ◮ Compare categories directly ◮ Examine graphically and econometrically

Years of Schooling Average years of education Relative education gap Overall Rural Urban Urban/Rural 1983 2.90 2.06 5.56 2.69*** (0.01) (0.01) (0.03) (0.02) 1987-88 3.14 2.29 5.89 2.57*** (0.01) (0.01) (0.03) (0.02) 1993-94 3.71 2.81 6.63 2.35*** (0.01) (0.01) (0.03) (0.03) 1999-00 4.27 3.30 7.21 2.18*** (0.02) (0.02) (0.03) (0.02) 2004-05 4.66 3.75 7.49 1.99*** (0.02) (0.02) (0.04) (0.01) 2011-12 5.77 4.69 8.34 1.79*** (0.02) (0.03) (0.04) (0.01)

Education Gaps by Year and Birth Cohorts (a) Age groups (b) Birth Cohorts 4 4 3.5 3.5 3 3 2.5 2.5 2 2 1.5 1.5 1 1983−84 1987−88 1993−94 1999−00 2004−05 2011−12 1 1983−84 1987−88 1993−94 1999−00 2004−05 2011−12 1919−25 1926−32 1933−39 1940−46 1947−53 1954−60 1961−67 1968−74 16−25 26−35 36−45 46−55 56−65 1975−81 1982−88 1989−1995

Rural-Urban Gaps by Education Category (a) Distributions (b) Gaps Distribution of workforce across edu Gap in workforce distribution across edu 100 5 80 4 60 3 40 2 20 1 0 1983−84 1993−94 2004−05 1983−84 1993−94 2004−05 1987−88 1999−00 2011−12 1987−88 1999−00 2011−12 0 Rural Urban 1983−84 1987−88 1993−94 1999−00 2004−05 2011−12 Edu1 Edu2 Edu3 Edu4 Edu5 Edu1 Edu2 Edu3 Edu4 Edu5

Ordered Probit Regressions Marginal effect of rural dummy Panel (a): Marginal effects, unconditional 1983 1987-88 1993-94 1999-00 2004-05 2011-12 Edu1 0.3489*** 0.3391*** 0.3215*** 0.3026*** 0.2757*** 0.2242*** (0.0026) (0.0022) (0.0023) (0.0025) (0.0025) (0.0031) Edu2 -0.0021*** 0.0051*** 0.0151*** 0.0231*** 0.0319*** 0.0421*** (0.0004) (0.0004) (0.0004) (0.0005) (0.0006) (0.0010) Edu3 -0.0496*** -0.0393*** -0.0197*** -0.0037*** 0.0072*** 0.0245*** (0.0006) (0.0005) (0.0004) (0.0004) (0.0005) (0.0008) Edu4 -0.0889*** -0.0762*** -0.0656*** -0.0538*** -0.0480*** -0.0169*** (0.0010) (0.0008) (0.0007) (0.0007) (0.0006) (0.0007) Edu5 -0.2082*** -0.2287*** -0.2514*** -0.2681*** -0.2668*** -0.2738*** (0.0022) (0.0020) (0.0023) (0.0028) (0.0031) (0.0040) N 203456 221228 199579 210209 220786 159,193 Panel (b): Changes 1983 to 1993-94 1993 to 2004-05 2004 to 2011-12 1983 to 2011-12 Edu1 -0.0274*** -0.0458*** -0.0515*** -0.1247*** (0.0035) (0.0034) (0.0040) (0.0040) Edu2 0.0172*** 0.0168*** 0.0102*** 0.0442*** (0.0006) (0.0007) (0.0012) (0.0011) Edu3 0.0299*** 0.0269*** 0.0173*** 0.0741*** (0.0007) (0.0006) (0.0009) (0.0010) Edu4 0.0233*** 0.0176*** 0.0311*** 0.0720*** (0.0012) (0.0009) (0.0009) (0.0012) Edu5 -0.0432*** -0.0154*** -0.0070*** -0.0656*** (0.0032) (0.0039) (0.0051) (0.0046)

Education attainment ◮ Gaps have declined ◮ Declining gaps across age and birth cohorts ◮ Significant decline in gaps for all categories except “secondary and above”

Occupation Distribution ◮ Aggregate 3-digit occupations into categories ◮ Three broad categories ◮ Agrarian ◮ Blue-collar ◮ White-collar ◮ Examine urban and rural occupation distribution across categories

Occupation Distribution of Urban and Rural Workers (a) Distribution (b) Gaps Distribution of workforce across occ Gap in workforce distribution across occ 100 6 80 60 4 40 20 2 0 1983−84 1993−94 2004−05 1983−84 1993−94 2004−05 1987−88 1999−00 2011−12 1987−88 1999−00 2011−12 0 Rural Urban 1983−84 1987−88 1993−94 1999−00 2004−05 2011−12 White−collar blue−collar agri white−collar blue−collar agri

Multinomial Probit Occupation Regressions Marginal effect of rural dummy Panel (a): Marginal effects, unconditional 1983 1987-88 1993-94 1999-2000 2004-05 2011-12 White Collar -0.1900*** -0.2028*** -0.2042*** -0.2187*** -0.2153*** -0.2904*** (0.0026) (0.0024) (0.0026) (0.0031) (0.0033) (0.0044) Blue Collar -0.4834*** -0.4568*** -0.4580*** -0.4381*** -0.4084*** -0.2692*** (0.0031) (0.0029) (0.0030) (0.0035) (0.0038) (0.0049) Agrarian 0.6734*** 0.6596*** 0.6622*** 0.6568*** 0.6236*** 0.5596*** (0.0023) (0.0021) (0.0022) (0.0023) (0.0025) (0.0034) N 179646 193585 172005 178803 189195 132360 Panel (b): Changes 1983 to 1993-94 1993 to 2004-05 2004 to 2011-12 1983 to 2011-12 White Collar -0.0142*** -0.0111*** -0.0751*** -0.1004*** (0.0052) (0.0059) (0.0055) (0.0051) Blue Collar 0.0254*** 0.0496*** 0.1392*** 0.2124*** (0.0043) (0.0048) (0.0062) (0.0058) Agrarian -0.0112*** -0.0386*** -0.064*** -0.1138*** (0.0032) (0.0033) (0.0042) (0.0041)

Household Consumption ◮ How have consumptions levels of rural and urban households evolved? ◮ Examine mean per capita consumption expenditure of households ◮ Convert nominal values into real ◮ use state-level poverty lines ◮ different poverty lines for rural and urban ◮ Examine the entire consumption distribution

Rural-Urban Percentile Consumption Gaps (a) Pre-MNREGA (b) Post-MNREGA .6 .7 .6 .5 lnmpce(Urban)−lnmpce(Rural) lnmpce(Urban)−lnmpce(Rural) .5 .4 .4 .3 .3 .2 .2 .1 .1 0 0 −.1 −.1 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 percentile percentile 1983 2004−05 2004−05 2011−12

Consumption trends ◮ Declining gaps in household consumption levels between 1983-2005 till 40th percentile ◮ Widening gaps for higher percentiles ◮ Consumption gaps widened post 2004-05

Rural-Urban Gaps in States ◮ Are the aggregate patterns general across India? ◮ What are the drivers of the aggregate trends? ◮ How important is growth? ◮ Exploit panel feature using state-level data to identify

State Rural-Urban Education Gaps State level relative education gap in 1983 and 2004−05 State level relative education gap in 1983 and 2011−12 1.80 ML 2.00 1.80 Relative gap in 2004−05 Relative gap in 2011−12 1.60 ML TR AS 1.60 MP KA TR MP AS HR WB AP 1.40 BR RJ BR GJ OR 1.40 WB KA MN AN MH OR PY TN AP TN GJ JK RJ MH HR HP UP PB 1.20 AN HP GA UP 1.20 PB PY KL MN JK GA KL 1.20 1.40 1.60 1.80 1.20 1.40 1.60 1.80 Relative gap in 1983 Relative gap in 1983

Occupation Dissimilarity Index ◮ Capture occupation dissimilarity using Duncan Index � � N U N R D = 1 � � j j � � � N U − N R 2 � � � � j ◮ N k j , k = U , R : number of type-k workers in occupation j ◮ N k , k = U , R : total number of workers of type k ◮ D is bounded between 0 and 1: higher D implies greater dissimilarity

State Rural-Urban Occupation Gaps State level occupational dissimilarity index in 1983 and 2004−05 State level occupational dissimilarity index in 1983 and 2011−12 .8 .8 ML KA MP AR SK MH AS GJ GJ MH Dissimilarity index in 2004−05 Dissimilarity index in 2011−12 MP NL .6 .6 AR WB AP AP BR KA BR UP NL ML AS OR SK WB RJ TR TN MZ MZ TR RJ UP DN PB PB HR OR DN HR HP PY CH HP TN JK JK .4 .4 AN MN LD GA PY MN AN DL LD GA KL DL KL .2 .2 CH 0 0 0 .2 .4 .6 .8 0 .2 .4 .6 .8 Dissimilarity index in 1983 Dissimilarity index in 1983