Does Liberalisation Reduce Labour Market Inequality? Caste and Occupational Outcomes in India

This paper investigates how trade liberalization reshaped caste-based occupational mobility in rural India. Using district-level exposure to the 1991 tariff reforms and nationally representative survey data, we provide the first causal evidence on how market integration affected labor market outcomes for Dalits (historically marginalized groups). We classify occupations by wages, skill intensity, task content, and international prestige scales to capture job quality. Our results show that while overall employment increased, Dalits in more liberalized districts were disproportionately excluded from high prestige occupations and shifted into low-wage, insecure work. Education emerges as a key mechanism: tariff exposure improved Dalit literacy but reduced higher-education attainment, limiting access to skilled jobs. These effects were most pronounced in states with flexible labor laws, where discriminatory hiring and firing practices could more easily operate. The findings demonstrate that structural reforms can reinforce existing social hierarchies, highlighting the importance of considering inequality transmission and barriers to mobility in assessing the population-wide effects of globalization.