Does a good father now have to be rich? Intergenerational income mobility in rural India

• Published in: Labour economics Vol. 60; pp. 99 - 114
• Main Author: Shariq Mohammed, A.R.
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.10.2019
• Subjects: D31; J62
• ISSN: 0927-5371; 1879-1034
• DOI: 10.1016/j.labeco.2019.06.005

•Intergenerational income persistence in rural India is lower than analogous evidence.•Between-groups coefficient captures the rate of income convergence between groups.•Pace of income convergence between SC/ST and other groups is very slow. For developing countries, it is difficult to find income mobility studies that rely on datasets linking parents with their children. Most of the available evidence for developing countries, instead, relies on co-resident households and two-sample instrumental variables approach, and findings in the mobility literature suggest that these approaches could introduce bias in the IGE estimates. The current study rectifies this important omission for rural India, and develops strategies that will be useful for similar research in other developing countries. Using a panel dataset spanning 1994–2012, I find that the intergenerational income persistence for rural India is lower than analogous evidence from other developing countries (IGE: 0.30 [se:0.03]). However, the between-groups coefficient of 0.74, which is corroborated by repeated cross-sections from the National Sample Survey, indicates that India is progressing towards cross-caste equality, but at a disappointingly slow rate.