An analysis of decomposition of consumption function between male and female households in India

Abstract

This paper offers to examine the decomposition of the consumption function of the male and female households in India. The decomposition of consumption function is explained by the socio‐economic and demographic variables. The dataset on the 61st round (2004–2005) and 68th round (2011–2012) of NSSO has been used for the analysis. The ordinary least squares (OLS) method is used to explain the important determinants of household consumption expenditure. Also, the Blinder–Oaxaca (B‐O) decomposition technique is used to estimate and to explain the difference of the per capita consumption expenditure of male and female households. The results find that age, household size, education, wages, occupation, and rural dummy are key determinants of the consumption function of male and female households. The results also found that the impact of education and occupation particularly in the service sector is relatively higher for female households than male households. Moreover, the results from the B‐O decomposition method are found that there is a positive gap of per capita consumption expenditure between male–female households in 2004–2005 and these differences are coming from differences of endowment effect between male and female households. But, the results from the year 2011–2012 data have shown that there is a negative mean difference in consumption expenditure of male and female households and this difference is coming from the differences of coefficient effect between male and female households. Finally, the results concluded that the per capita consumption expenditure gap is explained due to changes in education, occupation, and earnings of households.