# **3.1 Household characteristics and nature of the sample**

Descriptive statistics for the whole country and its four main regions<sup>5</sup> in both periods treating the 1982 and 1999 rounds of the panel as repeated cross sections are reported in table 1. While there was some decrease in household size, which decreased, from 7.0 to 6.0, with about 4 persons in the 14 to 60 age category, 0.4 aged above 60, and 2.5 below the age of 14 (compared to 1.8 in 1982), we note a marked increase in educational attainment, as illustrated by the fact that years of education attained by household heads increased from slightly less than 2 in 1982 to 5 in 1999. The gap that had earlier separated northern and southern states narrowed considerably. At the same time, population growth has led to a decline in the average land endowment per person, from 1.5 ha in 1982 to 0.8 ha in 1999, and a small increase in landlessness, from 21% to 25%. The share of female headed households is, with 6.8%, almost identical in both periods, with female headship more pronounced in the South than in other regions.

Survey data point towards an annual increase of per capita income of 3.1% during the period under concern. This masks pronounced differences across regions with the South having caught up and even replaced the North as the region with the highest income in the second period. The overall improvement in living standards suggested by increased income is mirrored by a significant rise in asset values of approximately 6% per year.<sup>6</sup> Income shares point towards a modest level of diversification of income sources. While income from crop and livestock production dropped by about 9 percentage points, from 59% to 51% employment in own agriculture remains the most important source of income in India’s rural economy. The fact that this is followed by agricultural wage employment, the share of which has actually increased over the period (from 18% to 27%) points to a continued importance of agriculture and the importance of agricultural wage employment for the landless.

The share of household income from self-employment and salary employment in rural India has been more or less constant; implying that growth of the rural non-farm sector has been just large enough to absorb population growth. This contrasts with other countries where the rural non-farm economy developed as a result of out-migration of labor or due to households taking up non-farm self employment. In fact, according to our data, the main source of income diversification was growth of non-farm wage employment, participation in which increased from 8.6% in 1982 to 20% in 1999. This fact, which is also noted elsewhere (Foster and Rosenzweig 2004), could result from the government’s emphasis on creating rural employment through mechanisms ranging from direct subsidies for firms to set up in remote areas to industrial and labor market regulation such as small scale reservation acts (Besley and Burgess 2004).

> 5 We group states into four regions as follows: The North includes the states of Haryana, Himachal Pradesh, Punjab, and Uttar Pradesh; the West includes Gujarat, Maharashtra, Madhya Pradesh, and Rajasthan; the East includes Assam, Bihar, Orissa, and West Bengal; and the South includes Andhra Pradesh, Karnataka, Kerala, and Tamil Nadu.

> 6 Part of this increase may be due to improvements in the survey instrument which, by asking for assets in a more disaggregated manner, is likely to have measured assets much better in the second period. As data for 1982 were available only in pre-aggregated form, we can not test this.

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