If would be able to dissagragate the economic growth in Gujarata respecting the 'work force origine' - I guess you could proof sth. Otherwise - you do not see who from the growth come from. Best.

Ewa Lechman

This is an interesting question. Similar situation exists with respect to the population growth in Johor Bahru Malaysia and economic growth in Singapore. In several US states represent similar trends. Good luck with your study.

States are based on administrative criteria. They might differ from regions defined on economic grounds, due to commuters, regions sharing the same infrastructure etc. In general, these linkages can constitute regional spillovers.

In that case, spatial effects should be significant. You could specify an econometric model to test this hypothesis. For example, you can run a Barro type growth regression, which is extended by spatial autoregressive or spatial moving average effects.

Try also spatial lag models (preferably as panel) and, as preliminary evidence - Moran`s stats. Best .E

Sir, Recently i have worked on productivity of Indian states and the paper was presented to Office of the registrar general and census commissioner India. Yet it is not published, so i cant share it with you.. but if you will look at the scenario of the Main and Marginal Workers of the states , you will get a good idea about the  picture. 

One more question is that, if people are migrating, then they are looking for better employment opportunity which is available only where the growth is there. 

Means statistically you may find some correlation between number of workers migrating to Gujarat from Rajasthan and the growth of Gujarat.  But actually they are migrating because they find better growth in Gujarat. So personally i Believe that you will have to first find out the reason (fundamental) which can prove the growth of neighboring states  and population changes in mother states...

It is very likely that there are spatial spillovers between Rajastan and Gujarat, as well as with respect to other Indian states. As others have already pointed out, you could estimate this rather easily, by estimating a spatial growth model. 

such spatial spillovers in states of Punjab and Bihar have been empirically examined in earlier studies especially in terms of agricultural growth. so it i too believe spatial growth model could be used in this case.

One addition: A spatial model will be the strategy to proceed, and the spatial effects should be significant. Moreover, the Moran's I should be insignificant in the extended model. Otherwise, you should try a different spatial specification.

ote that the spatial effects will refer to the average of Indian states. You need to collect data at least for some states, i.e. not only two in order to run the respective regression. Despite that, however, the spatial effects should change only modestly over time. You can check that, as the effects can be obtained for each period. A high fluctuation might be seen as evidence that the model is misspecified. 

Considering levels of migration of one nation's citizens to another nation, there might be a link between popn growth and economic development. Revise on migration laws between the two states and check on the yearly volumes of migrants.

it would be interesting to explore the network/ peer effects (is the population growth highest in villages in rajasthan which have also seen the highest migration levels to gujarat?), ie. are people from these villages encouraged to have more children because they feel that they can support them through migration incomes?

You could use the marginal propensities to consume of both regions and link them in a regression model, perhaps could calculate the different elasticities and use a gravity model of regional science, best wishes

Yes there could be spatial spillover, but that is only a partial explanation.