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Disadvantage And Discrimination In Self-Employment - Caste Gaps In Earnings In Indian Small Businesses

  • Ashwini Deshpande

    (Department of Economics, Delhi School of Economics, Delhi, India)

  • Smriti Sharma

    (Department of Economics, Delhi School of Economics, Delhi, India)

Using the 2004-05 India Human Development Survey data, we estimate and decompose the earnings of household businesses owned by Scheduled Castes and Tribes (SCSTs) and non-SCSTs across the earnings distribution. We find clear diferences in characteristics between the two types of businesses with the former faring signicantly worse. The mean de-composition reveals that as much as 55 percent of the caste earnings gap could be attributed to the unexplained component. Quantile regressions suggest that gaps are higher at lower deciles, providing some evidence of a sticky foor. Finally, quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher, suggesting that SCST-owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination.

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Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 236.

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Length: 39 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:cde:cdewps:236
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  1. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc.
  2. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
  3. Buchinsky, Moshe, 1994. "Changes in the U.S. Wage Structure 1963-1987: Application of Quantile Regression," Econometrica, Econometric Society, vol. 62(2), pages 405-58, March.
  4. Ashish Singh, 2011. "Farm income inequality and the role of caste: new evidence from India," Economics Bulletin, AccessEcon, vol. 31(4), pages 2847-2862.
  5. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
  6. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  7. Deon Filmer & Lant Pritchett, 2001. "Estimating Wealth Effects Without Expenditure Data—Or Tears: An Application To Educational Enrollments In States Of India," Demography, Springer, vol. 38(1), pages 115-132, February.
  8. Allen, W. David, 2000. "Social networks and self-employment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(5), pages 487-501.
  9. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 453-479, December.
  10. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  11. Ashwini Deshpande & Smriti Sharma, 2013. "Entrepreneurship or Survival? Caste and Gender of Small Business in India," Working papers 228, Centre for Development Economics, Delhi School of Economics.
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