Journal of Scientific Research and Reports

Income dynamics of different districts of Kerala have been studied using per capita income derived from the agricultural sector by Markov chain analysis. Transition probabilities and steady states have shown high level of income dynamics for majority of districts. Most of the districts have shown a high retention probability in high and low-income states. The districts Palakkad and Kollam exhibited high instability in high-income states. The steady state probabilities revealed a polarising nature of agricultural income towards the low-income category for many districts. The convergence of the agricultural income across the districts has been analyzed using unit root tests (Phillips-Perron test) for pairwise differences of income across the districts, illustrated that the majority of the districts have converged in pairs to establish a similar nature of income dynamics over time. The income dynamics of the districts have shown an inclusive growth pattern in agricultural income of Kerala. While the income of Wayanad has shown a divergence with all other districts, Idukki has shown a divergence nature with all districts except Thrissur district. The Phillips-Perron (PP) test of the districts with the state average exhibited convergence of income with all the districts except for Ernakulam, Wayanad, and Idukki districts. These findings can assist policymakers to formulate agricultural development plans specific to a given region in order to reduce income inequality and foster balanced growth across the districts of Kerala.