Prices, inequality, and poverty: Methodology and Indian evidence

Ankita Mishra, Ranjan Ray

Research output: Contribution to journalArticleResearchpeer-review

15 Citations (Scopus)

Abstract

This paper uses a methodology for evaluating the distributional implications of price movement for inequality and poverty measurement. The methodology is based on a distinction between inequalities in nominal and real expenditure. The conversion of nominal to real expenditure takes into account the varying household preferences. The empirical application to the Indian budget datasets from NSS rounds 50, 55, and 61 shows the usefulness of the proposed procedures. The relative price changes in India have tended to be inequality and poverty reducing as confirmed by formal statistical tests. The result is robust to expenditure dependent equivalence scales. The progressivity of the relative price changes weakened in the second half of our time period as Fuel and Light overtook the composite group called Miscellaneous in recording the largest price increase. While the poverty rates registered a decline, which was marginal in the urban areas, there was a sharp increase in inequality.
Original languageEnglish
Pages (from-to)428 - 448
Number of pages21
JournalReview of Income and Wealth
Volume57
Issue number3
DOIs
Publication statusPublished - 2011

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