Substack

Friday, October 29, 2021

Location is destiny - India edition

Branko Milanovic's seminal work illustrated the importance of location (country of residence) as the biggest determinant of global inequality. He argued that more than luck or effort or specific circumstances, people's economic outcomes are driven by the level and distribution of income within their country. 

The Opportunities Project work of Raj Chetty and Co highlights the importance of place of birth in determining future life outcomes of Americans. 

In the context of India, Prakash Loungani and others from the IMF have a paper that explores the role of location in determining living standards in India. 

Their headline finding,

It's not for, instance, caste or class that are really the dominant sources of your income. But as we were discussing, the fact of whether or not you were born in a poor rural community versus being born in an urban community, really is what determines 20, 25% of your income, just this one factor... we find that almost a third of living standards is likely to be determined by location alone.

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