Sunday, May 10, 2009

Caste networks and mobility

An NBER working paper by Kaivan Munshi and Mark Rosenzweig claims that spatial and marital mobility in India have been constrained by the rural caste-based networks, which provides mutual insurance and enables smoothing of consumption in the absence of well functioning markets.

A testimony to the resilience of the caste networks is their finding that "among households with the same permanent income, a permanent increase in incomes in the rest of the jati increases its participation in the caste-based insurance arrangement, while at the same time lowering mobility". The increase in inter-caste marriages over time in urban areas due to the availability of new and superior forms of insurance, suggests that marital mobility could increase in rural areas too as economic growth penetrates the rural economy.

Update 1
Abhijit Banerjee and Co explored data from marriage advertisements in newspapers and find that since supply and demand are well balanced within each caste, the cost of finding an appropriate match is not very high, thereby leading to the persistance of caste in the marriage market. (also in Market Design)

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