Working Paper: CEPR ID: DP15778
Authors: Guilhem Cassan; Daniel Keniston; Tatjana Kleineberg
Abstract: Workers’ social identity affects their occupation, and therefore the structure and prosperity of the aggregate economy. We estimate a general equilibrium Roy model of this phenomenon in the Indian caste system, where work and identity are particularly intertwined. New dataon occupation, wages, and caste’s traditional occupations and social status show that workers are over-represented in their traditional occupations and under-represented in socially higher or lower occupations. We consider counterfactuals removing castes’ hierarchical and occupational links. Despite more efficient human capital allocation, aggregate output gains are small–in some counterfactuals negative–due to weaker caste networks and reduced learning across generations.
Keywords: occupational choice; human capital allocation; caste networks; aggregate productivity; occupational identity; India
JEL Codes: E24; E71; J21; J62; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| caste identity (J15) | occupational choice (J29) |
| caste identity (J15) | economic outcomes (F61) |
| occupational choice (J29) | economic outcomes (F61) |
| caste identity (J15) | traditional occupation (J44) |
| traditional occupation (J44) | wages (J31) |
| removing traditional occupations (O14) | economic output (E23) |
| removing caste hierarchy (P39) | economic output (E23) |
| removing traditional occupational links (J62) | economic output (E23) |
| weaker networks (D85) | productivity losses (J17) |
| reduced intergenerational learning (I24) | productivity losses (J17) |