Income convergence in India: a nonparametric approach

Abstract

This study tests the convergence hypothesis across 22 Indian states for the time period from 1980–1981 to 2010–2011. Using second order Gaussian Kernel density function, results reveal a multi-modal behavior of income distribution with significant signs of club formation across different income strata over the transitional process. The results from quantile estimation shows that Indian states are diverging in absolute sense however converging on conditional basis. Moving from lower to higher quantile the strength of absolute divergence weakens whereas the conditional convergence is getting stronger.