INCOME DISTRIBUTION IN THE SUB-URBAN AREAS A CASE STUDY OF LUCKNOW DISTRICT

Abstract

Income inequality studies are an important aspect of economic studies. They are of particular importance to developing countries such as India. The findings of such studies are required for a proper assessment of the regional economic imbalance that needs to be minimized for effective rural planning. It is felt that the scenario in the urban sector is likely to be similar in most metropolitan cities and towns. This may be due to the existence of almost identical job opportunities that are common to most cities and towns. The rural and sub-urban sectors, however, present employment scenarios that could be peculiar to the district, and may sometimes differ from those of the towns or cities on whose periphery they may be situated. In a vast country like India, where regional cultural diversity is varied, each region may exhibit characteristics unique to itself. Because of this, studies that attempt examination of the income distribution patterns in sub-urban and rural districts of various regions ,are likely to attract interest in economics research. To tailor the scope for an individual research problem, it is felt necessary to limit the study to a small portion of this vast investigation and direct the study to a specific geographical area. In contemporary India, the concept of a pure "rural" or "urban" area is elusive. The structure of the regional development does not permit the clear demarcation of the boundary separating the two. It has been observed that there is hardly any village that does not exhibit a thin trace of urbanity. Likewise, there is no urban area unaccompanied by a rural tinge. In general, the development of any urban area gradually extends its influence to the neighbouring areas that may be by and large "rural" comparison. Most "rural" areas undergo a series of developments that cause them to function in later years as somewhat underdeveloped "urban areas". It is felt therefore, that investigations into the complexity of the economic balance in this urban-suburban/rural scenario are likely to contribute to a better overall understanding of the economic growth within the entire region under study. The aim of governments of developing countries is to promote as far as possible uniform economic growth and development in various parts of the country. This is particularly true in developing nations in which certain parts may be developed at the expense of others. Income studies provide necessary information that leads to improved regional planning and framing of corrective policies. Some of the outcome of income related studies are as follows: (i) Income studies help in assessing the income differential existing in various sections of the society, or within different pockets of a given region. The causes for the observed income differential are subsequently identified and corrective measures can then be initiated .For example, efforts can be directed to improving the lot of the weaker sections of the society by promoting schemes to improve their living conditions. Schemes that aim at improvements in the quality ofeducation and physical well being can be advocated.(for example: free education, food, better job avenues and opportunities, and other miscellaneous benefits) This practice is currently being followed in certain developed countries (ii) Assessment ofthe income differential levels also aids in the identification ofthe upper income groups of the population. This section of the population can be targeted with revised tax laws that ensure a more level distribution of income and wealth, and, can to some extent undo the evils of wealth concentration in the hands of a few. In developing countries such as India, the leaders were aware of this socio-economic challenge; a hand over from the pre-independence days , whereby, a small minority lived in ostentatious luxury while the vast majority led lives of abject poverty. They anticipated the increase of income inequality and felt that if timely corrective steps were not initiated to curb this destructive trend, the socio-economic stability of the country would be greatly endangered. Accordingly, the constitution of free India framed in 1949 incorporates a clear understanding to initiate any course of action that will be conducive to the social and economic upliftment of the country as a whole. In the present study, the sub-urban areas of the district of the state capital of Uttar Pradesh, namely Lucknow, have been considered. The income distribution characteristics of the study area have been examined. Two types ofstudies have been conducted on a suitably sized sample drawn from the sub-urban population of the district of Lucknow. These are: 1.Studies relating to the assessment of the income differential pattern and inequality within the population. For this purpose, the population is grouped into various classes based on certain criterion., and the level of inequality has been examined in relation to various factors 2. Studies relating to the isolation, estimation and significance of the determinants of the income earnings within the population. The details of the studies are briefly as follows: in A] STUDIES RELATING TO THE ASSESSMENT OF THE INCOME DIFFERENTIAL PATTERN AND INEQUALITY WITHIN THE POPULATION. Various approaches for income inequality assessment are subsequently applied for estimating the income differential that exists within the population. The approaches used are: statistical measures like the mean and deciles, graphical methods such as the Lorenz curves and various income inequality measuring indices notably, the Gini Coefficient ,the Coefficient of Variation, Standard Deviation of Logarithms and the Theil Index. The semi-urban population is classified into the following categories for the purpose of income differential assessment: * Classification based on the type of the family structure * Classification based on religion practised in the household. * Classification based on the caste of the household. * Classification based on the predominant occupational activity of the household. * Classification based on the occupational diversification within the household. * Classification based on the age of the head of the household. * Classification based on the educational attainments of the head of the households. The income levels of each of these classes of households are compiled and subjected to the analysis using the selected approaches. The results and the discussions of this analysis are then critically examined and accordingly interpreted. B] STUDIES RELATING TO THE ISOLATION, ESTIMATION AND SIGNIFICANCE OF THE DETERMINANTS OF THE INCOME EARNINGS WITHIN THE POPULATION. Data of an effective sample of 300 households was collected using primary data collection with the help of pre-tested schedules. The households were segregated on the iv basis of their occupational characteristics (Agricultural/Non-Agricultural categories). Since possession and utilization of land holdings are found in about 76% of the household regardless ofthe occupational category, it was thought prudent to construct three different models that would explain income earnings within the population. These three models are prepared for (a) Agricultural Households (farmers) (b) Non agricultural households (c) All households. These are designated as Model 1, Model II and Model III respectively. Each model differs in the choice of the explanatory variables to be used, and this has accordingly been taken into consideration in the model specifications. The independent variables can be broadly classified as : human capital attributes ( AGH, EDU, MOBID and MOBOD), economic characteristics ( INGAS, MALPAW, DIVOC, UGLO and ZODIN ), agroeconomic attributes (SIZLA, IRRI, CROPA and UMCUM) and the social attributes ( RELIG, CASTE1, CASTE3 and FAMST . Log-linear based (OLS) models have been considered. The dependent variable (income earnings) is regressed upon relevant identified independent variables. The models are pre tested/corrected for multicollinearity and the "dummy variable trap". The models were further tested for the presence of heteroscedasticity, using the Bruesh-Pagan test. All the three models were found to be free from problems ofheteroscedasticity at alevel a =0.05 The findings ofthe study indicated that in each model different variables turned out to be of statistical significance. In Model I, 8variables turned out to be statistically significant. These are FAMST, INGAS,DIVOC,MOBID,SIZLA,CROPA,UMCUM and ZODIN. Model II shows statistical significance for 4variables, namely. RELIG, INGAS, MOBID and MOBOD. Model III has 7statistically significant variables, namely, RELIG,CASTE 1,INGAS ,DIVOC ,MOBID ,MOBOD and ZODIN. The significance of the various variables were reviewed in relation to the characteristics of the region and theprobable factors influencing the findings were discussed. A comprehensive review of the overall findings is finally presented and policy measures guided by the findings are suggested for improvements in the socio-economic structure of the study area.