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Fiscal pressure of migration & horizontal fiscal inequality: Evidence from Indian experience

Publication date

Jan, 2018

Details

WIDER Working Paper 2018/4. Helsinki: UNU-WIDER.

Authors

Pinaki Chakraborty and Shatakshi Garg

Abstract

This paper examines the patterns and trends in inter-state migration across Indian states and observes that migration is affected by demographic profile as well as the fiscal profile of states. Econometric estimation suggests that level of vertical federal transfers and its horizontal distribution has an impact on out-migration. To correct for the extant horizontal fiscal inequality across Indian states, the paper suggests a relatively more progressive transfer system and a developmental fiscal policy stance at the state level to reduce pressure of out-migration to prosperous regions of the country.

Keywords: Migration, inequality, demography, fiscal policy, state finance, intergovernmental transfers

JEL classification codes: E62, H7, O15, C33

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