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Earnings Inequality in India: Has the Rise of Caste and Religion Based Politics in India Had an Impact?

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  • Bhaumik, Sumon K.

    ()
    (University of Sheffield)

  • Chakrabarty, Manisha

    ()
    (Indian Institute of Management)

Abstract

Since 1989, there has been a sharp increase in the role of caste and religion in determining political fortunes at both state and federal levels in India. As a consequence, significant inter-caste and inter-religion differences in earnings have the potential to stall the process of economic reforms. Yet, the patterns and determinants of such differences remain unexplored. We address this lacuna in the literature, and explore the determinants of the differences in inter-caste and inter-religion earnings in India during the 1987-99 period, using the 43rd and 55th rounds of National Sample Survey (NSS). Our results suggest that (a) earnings differences between "upper" castes and SC/ST have declined between 1987 and 1999, (b) over the same period, earnings differences between Muslims and non-Muslims have increased, to the detriment of the former, and (c) inter-caste and inter-religion differences in earnings can be explained largely by corresponding differences in educational endowment and returns on age (and, hence, experience). However, differences in returns on education do not explain inter-caste and inter-religion earnings differences to a great extent.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2008.

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Length: 34 pages
Date of creation: Mar 2006
Date of revision:
Publication status: published in: A. Shariff and R. Besant (eds.), Handbook of Muslims in India, Oxford University Press, 2010, New Delhi
Handle: RePEc:iza:izadps:dp2008

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Keywords: caste; inequality; India; religion;

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  1. Yang, Dennis Tao, 2005. "Determinants of schooling returns during transition: Evidence from Chinese cities," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 244-264, June.
  2. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 600-621, June.
  3. Kijima, Yoko, 2006. "Why did wage inequality increase? Evidence from urban India 1983-99," Journal of Development Economics, Elsevier, Elsevier, vol. 81(1), pages 97-117, October.
  4. Angus Deaton and Jean Drèze & Jean Drèze, 2002. "Poverty and Inequality in India: A Reexamination," Working papers, Centre for Development Economics, Delhi School of Economics 107, Centre for Development Economics, Delhi School of Economics.
  5. Munich, Daniel & Svejnar, Jan & Terrell, Katherine, 2005. "Is women's human capital valued more by markets than by planners?," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 278-299, June.
  6. Datt, Gaurav & Ravallion, Martin, 1997. "Macroeconomic Crises and Poverty Monitoring: A Case Study for India," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 1(2), pages 135-52, June.
  7. Ira N. Gang & Myeong-Su Yun & Kunal Sen, 2002. "Caste, Ethnicity and Poverty in Rural India," Departmental Working Papers, Rutgers University, Department of Economics 200225, Rutgers University, Department of Economics.
  8. Meenakshi, J. V. & Ray, Ranjan, 2002. "Impact of household size and family composition on poverty in rural India," Journal of Policy Modeling, Elsevier, Elsevier, vol. 24(6), pages 539-559, October.
  9. Krishna, Anirudh, 2006. "Pathways out of and into poverty in 36 villages of Andhra Pradesh, India," World Development, Elsevier, Elsevier, vol. 34(2), pages 271-288, February.
  10. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 14(1), pages 53-68, February.
  11. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, Elsevier, vol. 68(2), pages 381-400, August.
  12. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  13. Heckman, James & Layne-Farrar, Anne & Todd, Petra, 1996. "Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on Earnings," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 562-610, November.
  14. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
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Cited by:
  1. Ira N. Gang & Kunal Sen & Myeong-Su Yun, 2008. "Was the Mandal Commission Right? Living Standard Differences between Backward Classes and Other Social Groups in India," CEDI Discussion Paper Series, Centre for Economic Development and Institutions(CEDI), Brunel University 08-12, Centre for Economic Development and Institutions(CEDI), Brunel University.
  2. Bhalotra, Sonia R. & Valente, Christine & van Soest, Arthur, 2009. "The Puzzle of Muslim Advantage in Child Survival in India," IZA Discussion Papers 4009, Institute for the Study of Labor (IZA).
  3. Ira N. Gang & Kunal Sen & Myeong-Su Yun, 2008. "Poverty In Rural India: Caste And Tribe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(1), pages 50-70, 03.

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