Identifying Living Income and Living Wage Zones of India

Anker Research Institute Working Paper Series | Number 7

Sandip Sarkar and Balwant Mehta

ABSTRACT

This paper tries to answer is whether it is possible to map India into Living Income/Living Wage zones, given its size and diversity. We approached this task by using cluster analysis to separate geographic areas into clusters with similar socio-economic and demographic characteristics associated with the cost of a decent standard of living for a family. This involved (i) first identifying the most relevant socio-economic and demographic characteristics and the most relevant datasets, and (ii) carrying out cluster analysis using those indicators. The cluster analysis was based on K-means methodology and was validated by unweighted composite index and hierarchical methodologies. We identified 24 broad rural living income/wage zones, and 25 urban living income/wage zones. These broad classifications will help conducting representative living income/wage studies in India in future.