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Working Papers | 2018

Is the Past Still Holding Us Back? A Study on Intergenerational Education Mobility in India (revised as on 26.09.18)

Kishan P K V

This paper explores various aspects of, and factors affecting intergenerational education mobility in India. We employ IHDS-II (2011-12) and prepare a representative dataset that goes beyond 'co-resident only' son-father pairs by utilizing the retrospective information conveying the educational attainment of the father of the male household head. From the resulting sample of 44,532 son-father pairs and appropriate cohort analysis, we find that there is still a high degree of intergenerational persistence in education, although the same is decreasing steadily over time. Through quantile regressions, we detect a non-linearity in the relationship between fathers' and sons' schooling outcomes along the education distribution. Moreover, the mobility gap between the historically advantaged subgroups (urban population, upper castes, Hindus, etc.) and the others (rural population, lower castes, Muslim, etc.) increasingly widens along the middle and upper quantiles of the distribution. Finally, "Higher Inequality (during fathers' generation) à Lesser Mobility" nexus in education plays out for the Indian scenario and thus corroborates the 'Great Gatsby Curve'. Other macro variables, economic growth and public expenditure in education, bear a positive association with education mobility.

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Working Papers | 2018

Indian Antecedents to Modern Economic Thought

Satish Y. Deodhar

The history of economic thought begins with salutations to Greek writings of Aristotle and Plato. While the fourth century BCE Greek writings may have been the fount of modern economic thought that emerged in Europe starting 18th century CE, there has been a general unawareness of the economic thinking that emanated from the Indian subcontinent. Pre-classical thoughts that had appeared in Vedas dating a millennium prior to the Greek writings had culminated in their comprehensive coverage in the treatise Arthashastra by Kautilya in the fourth century BCE. In this context, the paper outlines various ancient Indian texts and the economic thoughts expressed therein, delves on the reasons why they have gone unnoticed, brings to the fore the economic policies laid down by Kautilya, shows how these policies exemplify pragmatic application of the modern economic principles, and brings out in bold relief, the contribution of this Pre-Classical literature in the history of economic thought.

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Working Papers | 2018

Marketplace Options in an Emerging Economy Local Food Marketing System- Producers' Choices, Choice Determinants and Requirements

Aashish Argade and A. K. Laha

One of the important objectives of reforms in Indian agricultural marketing was to stimulate competition in the local food marketing system dominated by the state-regulated APMC marketplaces. This study was taken up to understand the different kinds of marketplaces that were available to producers besides the APMCs. Based on survey conducted in one of the pioneering states that introduced reforms, it was found that APMC and farm-gate emerged as the dominant marketplace options. The factors influencing choice of marketplaces were identified using binary logistic regression. Perishability of the produce, and services such as grading, storage and transport provided by buyers were found to be significant determinants of marketplace choice. A post-hoc survey was conducted to gauge farmers' expectations of services and facilities of a marketplace by presenting four scenarios. Even as farmers seem to expect a full-fledged APMC with wide-ranging facilities, warehousing seemed to be their major requirement. Willingness to pay for facilities and services was an important takeaway from the findings. The study has important implications for policy design and implementation, and scope for private sector participation

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Working Papers | 2017

What Does Matched Bank-Firm Data Tell Us about the Moral Hazard in Lending Decisions of State-Owned Banks in India? (Revised as on January 3, 2018)

Balagopal Gopalakrishnan

In this study, we examine quality of the lending decisions of public sector banks (PSBs) in India with a novel dataset which allows the identification of both the banks by the ownership types and their borrowers. We use a lender type prediction model where the bank type is determined by observable risk proxies such as ex-ante credit ratings, which influence the lending decision. The analysis of the lending decisions indicate that the PSBs are more likely to lend to observably less creditworthy firms relative to the private banks (PBs). We also find that smaller firms have a higher likelihood of obtaining credit exclusively from PSBs, possibly, consistent with the directed lending programs of the government. If we exclude systemically important banks and their borrowers from the sample, the likelihood of riskier firms obtaining credit exclusively from PSBs increases. Finally, firms which are likely to be impacted by political regime changes have a higher likelihood of an exclusive borrowing relationship with PSBs. The study contributes to the contemporary debates on the role of market discipline, disclosures, and moral hazard in banking.

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Working Papers | 2017

Exploring Linkages between Innovation and public policy- challenges and Opportunities

Rakesh Basant

Significant research has gone into the analysis of the complex linkages between public policy and innovation. While this research has generated a lot of interesting insights, it has also identified several gaps in our understanding of these linkages. This paper is an attempt to pool together some of the ideas that academic research has highlighted on the linkages between innovation and public policy and identify the current challenges as well as opportunities for meaningfully exploring these linkages further. Through a select review of the literature the paper (i) provides a broad overview of the public policy-innovation interface; (ii) discusses issues of conceptualizing and measuring innovation, innovation related activities and policy changes; (iii) summarizes mechanisms through which various policies impact innovation along with available evidence on the same; and (iv) identifies challenges in exploring policy-innovation interface along with a few potential areas of research in the context of India.

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Working Papers | 2017

Mathematical Modelling for Time-of-Use Pricing of Electricity in Monopoly and Oligopoly

Nidhi Kaicker, Goutam Dutta, Debamanyu Das, and Subhashree Banerjee

This study establishes the feasibility condition for efficiency gains to arise from time-of-use pricing in the electricity market in a monopolistic and oligopolistic set up using constrained optimization. In an oligopolistic set-up, the strategic interaction between producers depends on the level of demand. In case of high demand, the producers compete on the basis of output they will produce, resulting in a Cournot-type competition. On the other hand, in case of low demand, an oligopolistic structure may break with only the most efficient firm operating, or results in the emergence of leader firms and follower firms, i.e. the Stackleberg model.

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Working Papers | 2017

Vertical Integration, Market Structure and Competition Policy: Experiences of Indian Manufacturing Sector during the Post Reform Period

Rakesh Basant and Pulak Mishra

In the context of declining degrees of vertical integration in major industries of Indian manufacturing sector during the post-reform period, the present paper is an attempt to examine how such 'vertical disintegration' has affected firms' market power and its implications for competition policy. Using panel dataset of 49 majors industries of Indian manufacturing sector for the period 2003-04 to 2010-11 and applying the system GMM approach to estimate of dynamic panel data models, the paper finds that vertical integration does not cause any significant impact on average market power of firms in an industry. Instead, it is influenced by market size, and selling and technology related efforts. While selling intensity has a positive impact on market power, the impact of market size and technology intensity is found to be negative. Notably, like vertical integration, market concentration, import to export ratio, and capital intensity also do not have any significant impact on market power. The findings of this paper, therefore, have important implications for competition law and policy in general and policies and regulation relating to technology development and international trade in particular.

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Working Papers | 2017

Globalization and Inequality- A Pathway Through Education (Revised as on 02.04.18)

Kishan P K V

This study investigates the effect of globalization on economic inequality in a country through the channel of education. We measure globalization by the KOF globalization index (a composite index consisting of elements of economic, social, and political dimensions of globalization), economic inequality by the Gini coefficient of consumption/income distributions, and education outcomes by mean years of schooling in a country. An econometric model using appropriate panel data techniques is estimated for a sample of about 150 countries over the period 1980-2013. The results suggest that globalization improves the situation of economic inequality in a country, i.e. inequality in the country decreases. However, the precondition to this is that the population of the country is very less educated. As the country becomes more globalized, and the educational outcomes improve, the restorative effects of globalization on income inequality go down. At a turnaround point of about 6.73 mean years of schooling, globalization works towards worsening income inequality. The empirical results are robust to the use of inequality index from a separate data source and the change in time span of the study (1980-2008).

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Working Papers | 2017

Are the temperature of Indian cities Increasing?: Some Insights Using Change Point Analysis with Functional Data

A. K. Laha and Poonam Rathi

In recent years there has been considerable concern expressed worldwide regarding increase in temperature popularly called the global warming problem. In this paper we examine monthly temperature data of nine Indian cities for the period 1961 to 2013. We introduce a new Gaussian process based method for change point detection with functional data and use it to investigate the
existence of change point for the temperature data series of nine Indian cities. It is found that there has been a rise in the average temperature for eight of
the nine cities during this period. The magnitude of warming is found not to be uniform but vary across cities located in different parts of India. The cities
located in hilly areas is seen to have warmed more than those located in the plains. The estimated change points for the eight cities are not identical but most of them are in the period 1994 - 2001. The findings suggest that immediate policy measures are required to ensure that no further warming happens in these cities.

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Working Papers | 2017

New Approaches to Prediction using Functional Data Analysis

A. K. Laha and Poonam Rathi

In this paper we address the problem of prediction with functional data. We discuss several new methods for predicting the future values of a partially observed curve when it can be assumed that the data is coming from an underlying Gaussian Process. When the underlying process can be assumed to be stationary with powered exponential covariance function we suggest two
new predictors and compare their performance. In some real life situations the data may come from a mixture of two stationary Gaussian Processes. We
introduce three new methods of prediction in this case and compare their performance. In case the data comes from a non-stationary process we propose a modification of the powered exponential covariance function and study the performance of the three predictors mentioned above using three real-life data sets. The results indicate that the KM-Predictor in which the training data is clustered using the K-Means algorithm before prediction can be used in several real life situations.

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