Inequality-Growth Link in the Post Reform Indian States: Role of Human Capital

Abstract

The paper tries to explore both short and long run growth-inequality link in the post liberalisation era in Indian states. The study has shown that growth-inequality interaction is bi-directional and reciprocal in nature – trends in one affecting the other in a cumulative causation fashion rather than a one-shot impact. The link is also examined by taking human capital variables in growth regressions to identify the possible strait for which the emerging economic success is linked with increased disparities in living standards. The methodology of study is comprised of cross section and panel models with five, ten and twenty-year growth episodes.