Title: Unemployment and household spending in rural and urban India: Evidence from panel data (2019)
Authors: Manavi Gupta, Avinash Kishore
Discussant: Abhinav Narayanan

We conducted the 7th Consumer Pyramids Research Seminar on 11 February 2021 at 6.00 PM IST.

Event Summary

Manavi Gupta and Avinash Kishore presented results from their study on the effects of unemployment on household spending in India. They provided evidence that consumption is highly sensitive to employment shocks, with effects experienced across both rich and poor, as well as urban and rural households.

The authors employed the CPHS dataset given its sizable urban sample which enabled them to make comparative statements about urban and rural regions. Using data from 2019, the authors found urban households to be highly vulnerable to such employment shocks, with their income elasticity of consumption being much greater than that of their rural counterparts.

The authors used a simple difference-in-differences strategy and a quantile regression. They found that the top and bottom decile households faced the largest shocks following employment loss. Along with consumer durables, for which consumption expenditure declined the most, expenditure on health and education also declined.

Abhinav Anand, the discussant for the study, commended the authors on their focused research question, and novel use of CPHS data. He highlighted areas that required greater explanation and cautioned against the comparison of stock and flow variables. He recommended the use of CPHS’s panel data to eliminate time-invariant unobservables and outlined possible extensions for the study.

The authors responded to the comments and answered the audience’s remaining questions, following which the session concluded.

Use of CMIE Product implies acceptance of the usage agreement & privacy policy   ♦   FAQs   ♦  Diagnosis