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Caste Discrimination and Transaction Costs in the Labor Market: Evidence from Rural North India

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Takahiro Ito

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Abstract

This paper is an empirical attempt to quantify caste-based discrimination in the labor market using household data taken from rural North India. In the regression analysis, transaction costs associated with entry into the labor market and reservation wages are estimated along with market wages. The estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment. In line with previous studies, the results suggest that the achievements of India's reservation policy so far have at best been limited. In addition, a comparison between the estimates from the model employed in this paper and conventional (reduced-form) approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced-form approaches.

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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d06-200.

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Date of creation: Jan 2007
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Handle: RePEc:hst:hstdps:d06-200

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Keywords: regular employment; casual employment; labor market; India;

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Find related papers by JEL classification:
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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  3. Geeta Gandhi Kingdon, Jeemol Unni, 2001. "Education and Women’s Labour Market Outcomes in India," Education Economics, Taylor and Francis Journals, vol. 9(2), pages 173-195, August. [Downloadable!] (restricted)
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  7. Deolalikar, Anil B, 1988. "Nutrition and Labor Productivity in Agriculture: Estimates for Rural South India," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 406-13, August. [Downloadable!] (restricted)
  8. Rose, Elaina, 2001. "Ex ante and ex post labor supply response to risk in a low-income area," Journal of Development Economics, Elsevier, vol. 64(2), pages 371-388, April. [Downloadable!] (restricted)
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  10. Peter Lanjouw, 2007. "Rural Non-Farm Employment in India: Access, Income, farm, Poverty Impact," Working Papers id:913, esocialsciences.com. [Downloadable!]
  11. Ito, Takahiro & Kurosaki, Takashi, 2006. "Weather Risk and the Off-­Farm Labor Supply of Agricultural Households in India," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25774, International Association of Agricultural Economists. [Downloadable!]
  12. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-63, June. [Downloadable!] (restricted)
  13. Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September. [Downloadable!]
  14. Key, Nigel & Sadoulet, Elisabeth & de Janvry, Alain, 2000. " Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 82(2), pages 245-59, May. [Downloadable!] (restricted)
  15. Weinberger, Katinka, 2003. "The Impact Of Micronutrients On Labor Productivity: Evidence From Rural India," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25897, International Association of Agricultural Economists. [Downloadable!]
  16. Geeta Gandhi Kingdon, 1997. "Does the Labour Market Explain Lower Female Schooling in India?," STICERD - Development Economics Papers 01, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Takahiro Ito, 2009. "Education and Its Distributional Impacts on Living Standards," Global COE Hi-Stat Discussion Paper Series gd09-080, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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