How does occupational mobality reduce caste inequality?
Answers
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.
Economic transitions as drivers of convergence
Structural change has created new economic opportunities over the past 25 years, but it has also brought new challenges. In particular, market imperfections, which give rise to networks, can be exacerbated in a dynamic economy. Harish Damodaran’s fascinating book (goo.gl/mBCBwa) on Indian entrepreneurs documents the movement of castes from agriculture and administrative occupations into business in recent decades. My own research on the diamond industry shows how a historically disadvantaged caste took advantage of a shock to the world supply of rough diamonds in the late 1970s to move from agriculture and then industrial labour into the export business, over the course of a single generation. The encouraging theoretical and empirical finding that emerges from this research is that once networks form, they will strengthen relatively rapidly in historically disadvantaged castes (with weaker outside options). The occupational convergence between upper castes and lower castes that has been previously documented may well have been driven by many such transitions, supported by underlying caste networks, especially among the lower castes.