Mobility and Inequality in Indian Agriculture

Abstract

The aim of this paper is to study changes in income and wealth distribution in Indian agriculture using Farm Management Studies data from the Ferozepur district of Punjab. The paper uses a short time series of a ‘cohort’ of farms (not farmers) for 1967/68, 1968/69 and 1969/70. This is an especially interesting period since the Green Revolution was just beginning to gain importance in northern India. There has been much discussion about how the gains of the Green Revolution have been unfairly distributed (Byres (1972), Griffin (1974), Hanumantha Rao (1975), Junankar (1975), Das Gupta (1977)) due to the easier access large farmers have to credit and hence to high yielding varieties of-seeds, fertilisers and irrigation. In this paper I shall use regression analysis to study changes in inequality over time. The proposed method of analysis allows us to test whether inequality is increasing or decreasing on average, or whether it is changing due to mobility in the sample. We can also test the commonly made assumption of ‘time homogeneity’ (i e, transition probabilities remain constant over time) see Shorrocks (1976). Finally, we can test whether an individual farm that does well in one period does even better in the next period or, in Hart’s (1976) words, does ‘success breed success’. Our method employs Zellner’s seemingly unrelated regressions estimation technique to estimate a set of equations subject to restrictions.

This paper attempts to study changes in income and wealth distribution in Indian agriculture, using Farm Management Studies data for the Ferozepur district of Punjab. The proposed method of analysis allows the author to test whether inequality is increasing or decreasing on average or whether it is changing due to mobility in the sample. Also tested are the commonly made assumption of ‘time homogeneity’, i e, transition probabilities remain constant over time, and whether an individual farm that does well in one period does even better in the next period.