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Why is Mobility in India so Low? Social Insurance, Inequality, and Growth

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  • Kaivan Munshi
  • Mark R. Rosenzweig

Abstract

This paper examines the hypothesis that the persistence of low spatial and marital mobility in rural India, despite increased growth rates and rising inequality in recent years, is due to the existence of sub-caste networks that provide mutual insurance to their members. Unique panel data providing information on caste loans and sub-caste identification are used to show that households that out-marry or migrate lose the services of these networks, which dampens mobility when alternative sources of insurance or finance of comparable quality are unavailable. At the aggregate level, the networks appear to have coped successfully with the rising inequality within sub-castes that accompanied the Green Revolution. Indeed, this increase in inequality lowered overall mobility, which was low to begin with, even further. The results suggest that caste networks will continue to smooth consumption in rural India for the foreseeable future, as they have for centuries.

Suggested Citation

  • Kaivan Munshi & Mark R. Rosenzweig, 2005. "Why is Mobility in India so Low? Social Insurance, Inequality, and Growth," CID Working Papers 121, Center for International Development at Harvard University.
  • Handle: RePEc:cid:wpfacu:121
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    More about this item

    Keywords

    mobility; India; insurance; growth;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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