Working Paper: NBER ID: w28462
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 data on 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: Caste; Occupational Choice; General Equilibrium; Human Capital; 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 |
|---|---|
| Traditional occupations earnings vs. other jobs earnings (J31) | Caste identity (J15) |
| Returns to ability (I26) | Traditional occupations vs. modern ones (J29) |
| Caste identity (J15) | Occupational selection (J29) |
| Caste hierarchy (D73) | Likelihood of remaining in traditional occupations (J29) |
| Caste identity (J15) | Economic efficiency (D61) |
| Removal of caste-related preferences (J15) | Aggregate output gains (E23) |