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The impact of caste on economic mobility in India -Kaivan Munshi

-Livemint.com

The caste networks will disappear when the market economy starts to function efficiently

The caste system is arguably the most distinctive feature of Indian society. The Indian population is divided into four hierarchical classes, or varnas, with a large sub-population of untouchables excluded entirely from the system. Within each of these classes, and among the untouchables, are thousands of castes, or jatis. The central rule in Hindu society is that individuals must marry within their own caste. Recent genetic evidence indicates that this rule has been followed for over 2,000 years. Spatial segregation on caste lines within the village results in a high degree of local social connectedness, with caste clusters in distant villages and select urban locations linked to each other through ties of marriage over many generations. This unique social structure has remained in place 70 years after Independence, in one of the world’s most dynamic economies.

Convergence between upper and lower castes in education and jobs

Economic mobility is a prerequisite for development. Given the continuing importance of caste in Indian society, an obvious question to ask is how occupational and spatial mobility in the Indian economy has been shaped by the caste system. The first thought is that the exploitation, prejudice, and discrimination that are associated with the hierarchical aspect of the caste system would have stifled mobility among the lower castes. It is certainly true that the lower castes remained locked in unskilled, low-paying occupations for centuries in the traditional economy. There is also evidence of continuing discrimination in the labour market, although this appears to be statistical—that is, employers use caste as a proxy for unobserved socioeconomic characteristics—rather than prejudice. Despite these obstacles, evidence from surveys of nationally representative samples indicates that there has been convergence between the upper castes and the lower castes on education and occupations over the past decades.

Some of this convergence may be due to the affirmative action policy that has been in place since Independence, reserving seats in institutions of higher education and the central government for former untouchables and other disadvantaged groups. Another force driving convergence could be the caste-based networks that facilitate economic activity and support the mobility of their members in an economy where markets function imperfectly. Individual members of a caste can be severely sanctioned if they renege on their obligations because information flows smoothly within the caste and because they are tied to their community in many different ways. This allows high levels of cooperation to be sustained. Numerous historical accounts document the important role played by castes in supporting the rural-urban migration that accompanied British rule and the growth of cities in the 19th century. Particular castes found particular niches in the urban labour market, and once networks in the city were established, they supported the movement of fresh migrants from the hinterland, often over the course of many generations.

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