A Decompositional Analysis of Social Group Inequality: Evidence from India

Abstract

Using the nationally representative Indian household surveys collected by National Sample Survey Organization, we examine the welfare gaps across social groups for the entire distribution in 1983, 1993-94, 2004-05, and 2011-12. We use spatially adjusted per capita consumption expenditure as the measure of welfare and show that there exists significant welfare gap between Scheduled Tribes/ Scheduled Castes (STs/SCs) and General Category (GC) households at higher quantiles of the distribution, but the magnitude of the gap has declined over the years for the SC households. Using unconditional quantile regression decomposition we find that the coefficient effect (unexplained effect) dominates the endowment effect (explained effect) in explaining the gap in all four years. Further decomposition shows that difference in educational distribution across the ST/SC and GC households drives most part of the observed differences between them.