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

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  • Takahiro Ito

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.

Suggested Citation

  • Takahiro Ito, 2007. "Caste Discrimination and Transaction Costs in the Labor Market: Evidence from Rural North India," Hi-Stat Discussion Paper Series d06-200, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:hstdps:d06-200
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    Cited by:

    1. Chen, Hung-Ju & Sultana, Rezina, 2013. "Job Reservation and Intergenerational Transmission of Preferences," MPRA Paper 45036, University Library of Munich, Germany.
    2. Jeetendra P. Aryal & Stein T. Holden, 2012. "Livestock and land share contracts in a Hindu society," Agricultural Economics, International Association of Agricultural Economists, vol. 43(5), pages 593-606, September.
    3. Takahiro Ito & Kohei Kubota & Fumio Ohtake, 2011. "Noblesse Oblige? Preferences for Income Redistribution among Urban Residents in India," IDEC DP2 Series 1-8, Hiroshima University, Graduate School for International Development and Cooperation (IDEC), revised Mar 2013.
    4. Fontaine, Xavier & Yamada, Katsunori, 2014. "Caste Comparisons in India: Evidence From Subjective Well-Being Data," World Development, Elsevier, vol. 64(C), pages 407-419.
    5. Abu Shonchoy & PN Junankar, 2014. "The informal labour market in India: transitory or permanent employment for migrants?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-27, December.
    6. 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.
    7. Menuka Karki & Alok K. Bohara, 2014. "Evidence of Earnings Inequality Based on Caste in Nepal," The Developing Economies, Institute of Developing Economies, vol. 52(3), pages 262-286, September.
    8. Viktoria Hnatkovska & Amartya Lahiri & Sourabh Paul, 2012. "Castes and Labor Mobility," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 274-307, April.
    9. Prerna Singh & Dean Spears, 2017. "How status inequality between ethnic groups affects public goods provision: Experimental evidence on caste and tolerance for teacher absenteeism in India," WIDER Working Paper Series 129, World Institute for Development Economic Research (UNU-WIDER).
    10. Ray, Jhilam & Majumder, Rajarshi, 2012. "Wages & income mobility in Indian labour market: the post-reform scenario," MPRA Paper 42984, University Library of Munich, Germany.
    11. Sunil Mitra Kumar, 2016. "Why does caste still influence access to agricultural credit?," WIDER Working Paper Series 086, World Institute for Development Economic Research (UNU-WIDER).
    12. Jacqueline Doremus, 2017. "Unintended Impacts: How roads change health and nutrition for ethnic minorities in Congo," Working Papers 1702, California Polytechnic State University, Department of Economics.
    13. Viktoria Hnatkovska & Amartya Lahiri, 2011. "The Post-Reform Narrowing of Inequality Across Castes: Evidence from the States," Working Papers 1117, School of International and Public Affairs, Columbia University, revised Jan 2011.
    14. repec:bla:ecinqu:v:55:y:2017:i:3:p:1350-1369 is not listed on IDEAS
    15. Prabir Bhattacharya & Takahiro Sato, 2017. "Estimating Regional Returns to Education in India," Discussion Paper Series DP2017-09, Research Institute for Economics & Business Administration, Kobe University.
    16. Aryal, Jeetendra P. & Holden, Stein T., 2011. "Caste, Land and Labor Market Imperfections, and Land Productivity in Rural Nepal," CLTS Working Papers 6/11, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    17. Mahadevan, Renuka & Suardi, Sandy, 2013. "Is there a role for caste and religion in food security policy? A look at rural India," Economic Modelling, Elsevier, vol. 31(C), pages 58-69.
    18. Kamal Vatta & Takahiro Sato, 2012. "Indian Labour Markets and Returns to Education, 1983 to 2009-10," Discussion Paper Series DP2012-33, Research Institute for Economics & Business Administration, Kobe University.

    More about this item

    Keywords

    regular employment; casual employment; labor market; India;

    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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