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Economic Inequality in the ‘Democratic’ Nepal: Dimensions and Implications
Unformatted Document Text:  5 dynamics in this country, with usefulness in further research and policymaking. This paper investigates the scale, sources, and potential causes of economic inequality during the democratic era in Nepal. Next section describes the data. The scale and sources of inequality are explored in section three with following two sections examining the notions of horizontal and vertical inequality. Section six discusses the findings and their relevant social, political, and policy implications. Final section concludes with directions for future research. II Data Data for this analysis come from the 1996 and 2004 waves of the Nepal Living Standard Survey (NLSS). 2 These surveys were conducted, under the auspices of the World Bank and UK Department of International Development, to provide reliable statistics for monitoring and evaluation of development programs especially related to poverty. It is the national representation of the data that lend validity to the results derived, with the power to accurately capture the temporal trend in society. The two waves of the survey collected data on a wide array of household conditions and characteristics. Apparently, these two waves do not fully represent the recent era of parliamentary democracy begun in 1990 in Nepal. Yet, they capture two important modes of this era, with the first coinciding with the inception of the Maoist insurgency, which occurred after a brief experimentation with the multiparty democracy. The second wave marks the beginning of the greater political instability resulting from the further intensification of the Maoist insurgency, resurrection of the active monarchy, and dwindling power of the political parties. The original dataset included 3379 respondent-households in the first wave and 3912 in the second wave. This analysis uses all households from the first wave as they include estimates on

Authors: Wagle, Udaya.
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dynamics in this country, with usefulness in further research and policymaking.
This paper investigates the scale, sources, and potential causes of economic inequality during
the democratic era in Nepal. Next section describes the data. The scale and sources of inequality
are explored in section three with following two sections examining the notions of horizontal and
vertical inequality. Section six discusses the findings and their relevant social, political, and
policy implications. Final section concludes with directions for future research.
II Data
Data for this analysis come from the 1996 and 2004 waves of the Nepal Living Standard Survey
(NLSS).
2
These surveys were conducted, under the auspices of the World Bank and UK
Department of International Development, to provide reliable statistics for monitoring and
evaluation of development programs especially related to poverty. It is the national
representation of the data that lend validity to the results derived, with the power to accurately
capture the temporal trend in society. The two waves of the survey collected data on a wide array
of household conditions and characteristics. Apparently, these two waves do not fully represent
the recent era of parliamentary democracy begun in 1990 in Nepal. Yet, they capture two
important modes of this era, with the first coinciding with the inception of the Maoist
insurgency, which occurred after a brief experimentation with the multiparty democracy. The
second wave marks the beginning of the greater political instability resulting from the further
intensification of the Maoist insurgency, resurrection of the active monarchy, and dwindling
power of the political parties.
The original dataset included 3379 respondent-households in the first wave and 3912 in the
second wave. This analysis uses all households from the first wave as they include estimates on


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