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Title: Essays on Indian household savings, poverty and inequality within the context of economic growth
Author: Dimopoulou, Angeliki
ISNI:       0000 0004 8500 9214
Awarding Body: Royal Holloway, University of London
Current Institution: Royal Holloway, University of London
Date of Award: 2019
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This thesis addresses Indian household behaviour towards savings and explores the effects of economic growth on poverty and inequality. In the second chapter, using data from the Indian Household Consumer Expenditure survey, I show that vulnerable Indian households do not treat gold jewellery as a luxury good, but as a substitute to for savings. Households in rural locations, with irregular income, with illiterate heads and with casual or agricultural labour as the main source of income have higher expenditures on gold. This can be explained by the Permanent Income Hypothesis. Households mitigate future uncertainty by accumulating gold to smooth out future income shocks. I test two alternative hypotheses for high levels of spending on gold in India. I find limited support for an alternative hypothesis that high levels of gold expenditure simply reflect expenditures on dowries, a form of cultural preferences stemming from religion. I find no evidence of a second alternative hypothesis, namely that intra-household bargaining power, measured by the by wife's relative education level, influences gold purchases. Finally, using Engel curves, I examine whether these results are due to anomalies in the Indian data by examining expenditures on food, a normal good. In the third chapter, I deal with non-random sampling of the Indian Household Consumer Expenditure Survey, by adjusting the median annual per capita consumption. While comparing absolute and relative methodologies for calculating poverty rates in India, I show that the World Bank methodology produces higher absolute poverty rates than the relative 60% of the median annual consumption methodology; spatial analysis used for robustness, confirms that neighbouring states present very different poverty rates, emphasising the effects of local legal and welfare systems in every Indian state. I then use a logit maximum likelihood model to show how 5-Year Indian GDP growth, preceding the 2009-2010 Household Consumer Expenditure Survey used for this chapter, has had a lagged effect on enhancing the chances of poverty in Indian households. This is more prominent in the case where the relative methodology is used for estimating poverty. Furthermore, I show how households in Indian states that have experienced Services-led GDP growth in particular, are more prone to be poor, both in the case of 5-year and 3-year growth, where the absolute methodology is used to draw poverty lines. Where the relative methodology is used, shorter-term Services-led growth seems to benefit Urban households only, in relation to poverty. In the fourth chapter I use the economic growth observed in India in the 2000s, to assess its impact on inequality amongst urban households. I also deal with non-random sampling in Round 66 of the Household Consumer Expenditure surveys, by assigning probability weights. I find that inequality has decreased overall from 1994-95 to 2009-10, while the difference in inequality between the bottom and top of the expenditure distribution amongst urban population has increased. Using intra-decile analysis, I find that inequality within the bottom 10% of the urban population has decreased, while at the same time inequality within the lower middle class has increased. I test the effect of economic growth on inequality, within the Marginal Productivity Theory model; I find no support at State level. I find that States with high percentage of casual labour, as part of their urban population, are more likely to experience in increase in inequality, while there is also some support around growth in the Services sector to have a positive effect on increasing inequality, within the 5-year time frame. Finally, I find no support for Social Security and Welfare government spending to have an impact on inequality, at State level.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Development Economics ; India ; GDP growth ; SAVINGS ; POVERTY ; INEQUALITY