Income convergence in indian districts: New evidence from panel stationarity test with finite time dimension

Abstract

This paper tests for income convergence at the district level in India taking into account district income for 388 districts in 12 states during 2001–2011. We study income convergence among districts within a state as well districts across states that share similar initial conditions. Given the finite sample property of the data, we conduct a novel panel stationarity test with a fixed time dimension. The findings do not support the convergence of the per capita district income in Indian states. The deterioration in economic and social infrastructure in the relatively backward districts during the study period seems to drive the results. © 2020 John Wiley & Sons, Ltd. © 2020 John Wiley & Sons, Ltd.