The political economy of public goods: Some evidence from India

Banerjee, Abhijit; Somanathan, Rohini

doi:10.1016/j.jdeveco.2006.04.005

Cited by 354 publications

(274 citation statements)

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“…Such a correlation could arise from public and private investments. For instance, Banerjee and Somanathan (2007) find that districts with greater tribal population have less access to public goods due to their limited political clout. This would mean that the proportion of district proportion that is low caste would be a suitable instrument if it is conditioned on development indicators such as irrigation, education, access to roads, commercial banks and electricity.…”

Section: Empirical Strategymentioning

confidence: 99%

Caste, Female Labor Supply, and the Gender Wage Gap in India: Boserup Revisited

Mahajan

Ramaswami

2017

Economic Development and Cultural Change

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A look at the spatial variation in male and female agricultural wages in India throws up a seeming paradox: gender differentials are the largest in the southern regions of India that are otherwise favourable to women. Boserup (1970) hypothesized that this is due to the greater labor force participation of women in these regions. This is not obvious as greater female labor supply could depress male wages as well. This paper undertakes a formal test of the Boserup proposition. Econometrically, the main challenge is to relate wages to exogenous variation in labor supply. The results show that differences in female labor supply are able to explain 55% of difference in gender wage differential between northern and southern states of India.

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Section: Empirical Strategymentioning

confidence: 99%

Caste, Female Labor Supply, and the Gender Wage Gap in India: Boserup Revisited

Mahajan

Ramaswami

2017

Economic Development and Cultural Change

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“…2 On the other hand, Brakman et al (2002) find that government spending on infrastructure has increased regional disparities within Europe, while Artadi and Sala-i-Martin (2003) suggest excessive public investment has contributed to rising income inequality in Africa. In the case of India, Banerjee and Somanathan (2007) report that access to critical infrastructure services and public goods is in general positively correlated with social status, while a World Bank (2006) study also finds that the quality and performance of state-provided infrastructure services tend to be the worst in India's poorest states. The diversity of these empirical findings emphasizes the need for a well-specified analytical framework, within which the interaction between infrastructure spending, economic growth, and inequality can be systematically addressed.…”

Section: Introductionmentioning

confidence: 99%

Productive government spending and its consequences for the growth–inequality tradeoff

Getachew

Turnovsky

2015

Research in Economics

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This paper investigates the effects of productive government spending on the relationship between growth and inequality in an economy subject to idiosyncratic production shocks and heterogeneous endowments. Assuming lognormal distributions, we derive tractable closed form solutions describing the equilibrium dynamics. We show how the effect of government investment on the equilibrium dynamics of both inequality and growth depends crucially upon the elasticity of substitution between public and private capital in production. This has important consequences for the growth-and welfaremaximizing rates of government investment. Finally, we supplement our theoretical analysis with numerical simulations, calibrated to approximate the productive characteristics of a real world economy. With the empirical evidence strongly supporting the complementarity between public and private capital, our simulations suggest that conclusions based on the commonly employed Cobb-Douglas production function may be seriously misleading.Key words: Government investment; Idiosyncratic shocks; Growth; Inequality JEL Classification: D31, O41 Revised versionJune 2015*The paper has benefited from comments received on earlier versions from seminar participants at the University of Durham and the University of Pretoria. We also thank Santanu Chatterjee for useful suggestions. Research for this paper was carried out while Getachew was visiting the University of Washington in the Fall of 2013. Turnovsky"s research was supported in part by the Van Voorhis endowment at the University of Washington.**Corresponding author: sturn@u.washington.edu 1 IntroductionThe role of public investment in infrastructure as a source of economic growth continues to be widely debated in both developing and advanced economies, with different economies adopting different policy options. Several emerging-market countries including India, China, and Brazil have undertaken extensive public investment, to which their high growth rates of recent years may at least in part be attributed. In contrast, several European countries have reduced public spending, as they have pursued austerity measures intended to deal with concerns related to their rising debt levels.Contemporaneously with these diverse policies toward public investment, we have witnessed increasing income inequality, both in emerging markets and in most OECD countries. This raises the important question that we address in this paper, namely the relationship between public investment directed toward growth enhancement and its consequences for income inequality.Interest in the relationship between public investment, output, and growth has a long history, dating back to Arrow and Kurz (1970), who examined it in the context of a neoclassical economy.Beginning with Barro (1990), an extensive literature has evolved addressing the issue in an endogenous growth framework, with a general consensus that government spending on infrastructure can yield significant productivity gains and thus enhance growth. See e.g. F...

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“…At the least, further data can be collected and analyzed for districts that do worse than would be predicted based on initial conditions of access to credit, road connectivity or literacy. For example, land tenure systems or social fragmentation may matter for growth, as they do for agricultural productivity or expenditures on public goods (e.g., Banerjee and Iyer, 2005;Banerjee and Somanathan, 2007).…”

Section: Discussionmentioning

confidence: 99%

Regional Inequality in India in the 1990s: A District-Level View

et al. 2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper examines changes in regional inequality in India in the 1990s, using data for 210 of India's districts, spread across nine states. It provides a finer-grained quantitative analysis of growth patterns than has hitherto been attempted for India. The methodology is that of cross-section growth regressions, which seek to explain longer-run growth rates in terms of initial conditions of development. By identifying these connections, the study seeks to illuminate the role of aspects of physical infrastructure, financial development and human capital in influencing regional patterns of growth. In turn, this may have implications for government policies at the national and state levels. We find no evidence for divergence, but evidence for growth convergence in some cases, dependent on initial conditions. The district level results are supportive of the importance of literacy, and access to finance and roads. The methodology can be used to identify districts which may require additional policy intervention along these dimensions, as well as districts where the performance is worse than the average, even after conditioning on development measures, suggesting other causes of backwardness. Terms of use: Documents in

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The political economy of public goods: Some evidence from India

Cited by 354 publications

References 12 publications

Caste, Female Labor Supply, and the Gender Wage Gap in India: Boserup Revisited

Caste, Female Labor Supply, and the Gender Wage Gap in India: Boserup Revisited

Productive government spending and its consequences for the growth–inequality tradeoff

Regional Inequality in India in the 1990s: A District-Level View

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