A Division of Laborers : Identity and Efficiency in India
Workers' social identity affects their choice of occupation, and therefore the structure and prosperity of the aggregate economy. This paper studies this phenomenon in a setting where work and identity are particularly intertwined: the Indian...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/676661613498714271/A-Division-of-Laborers-Identity-and-Efficiency-in-India http://hdl.handle.net/10986/35140 |
| Summary: | Workers' social identity affects
their choice of occupation, and therefore the structure and
prosperity of the aggregate economy. This paper studies this
phenomenon in a setting where work and identity are
particularly intertwined: the Indian caste system. Using a
new dataset that combines information on caste, occupation,
wages, and historical evidence of subcastes’ traditional
occupations, the paper shows that caste members are still
greatly overrepresented in their traditional occupations. To
quantify the effects of caste-level distortions on aggregate
and distributional outcomes, the paper develops a general
equilibrium Roy model of occupational choice. The authors
structurally estimate the model and evaluate counterfactuals
that remove castes' ties to their traditional
occupations, through their direct preferences, and via their
parental occupations and social networks. The findings show
that the share of workers employed in their traditional
occupation decreases substantially. However, the effects on
aggregate output and productivity are very small–and in some
counterfactuals even negative–because gains from a more
efficient human capital allocation are offset by
productivity losses from weaker caste networks and reduced
learning across generations. The findings emphasize the
importance of caste identity in coordinating workers into
occupational networks that enable productivity spillovers. |
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