ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Income InequalitySubscribe to Income Inequality

‘Two Class’ Distribution of Income in India

Results from the 2012–13 income tax data reveal that Indian incomes, particularly high salaries and wealth-related income, are statistically distributed into two distinct classes. The bulk of the reported income distribution can be explained by an exponential distribution, while a small fraction at the top follows a more unequal power law (Pareto) distribution. This distinction has important implications for inequality, and provides a point of comparison with similar statistical regularities observed in rich countries.

Explaining Cross-Country Variation in Income Inequality

Most earlier studies exploring the cross-ountry variation in the degree of income inequality (measured by Gini ratio) are valuable but for the inappropriate data on inequality comprising estimates of Gini from incomparable data sets such as national and sub-ational surveys, per person and per household income distributions, and income and expenditure distributions. This paper explores the cross-ountry variation in income inequality based on relatively more comparable data and suggests that public policy aimed at reducing inequality and freedom may be the key variables that explain the variation in the Gini across countries. Prospects for launching national policy initiatives to reduce inequalities are rather dim since globalisation could be conveniently used to rationalise a relatively high level of income inequality.

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