A Division of Laborers: Identity and Efficiency in India / Guilhem Cassan, Daniel Keniston, Tatjana Kleineberg.

By:

Cassan, Guilhem

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w28462.Publication details: Cambridge, Mass. National Bureau of Economic Research 2021.Description: 1 online resource: illustrations (black and white)Subject(s):

E24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity
E71 - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
J21 - Labor Force and Employment, Size, and Structure
J62 - Job, Occupational, and Intergenerational Mobility
O15 - Human Resources • Human Development • Income Distribution • Migration

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Abstract: Workers' social identity affects their choice of occupation, and therefore the structure and prosperity of the aggregate economy. We study this phenomenon in a setting where work and identity are particularly intertwined: the Indian caste system. Using a new dataset that combines information on caste, occupation, wages, and historical evidence of subcastes' traditional occupations, we show that caste members are still greatly overrepresented in their traditional occupations. To quantify the effects of caste-level distortions on aggregate and distributional outcomes, we develop a general equilibrium Roy model of occupational choice. We structurally estimate the model and evaluate counterfactuals in which we remove castes' ties to their traditional occupations: both through their direct preferences, and also via their parental occupations and social networks. We find that the share of workers employed in their traditional occupation decreases substantially. However, effects on aggregate output and productivity are very small-and in some counterfactuals even negative-because gains from a more efficient human capital allocation are offset by productivity losses from weaker caste networks and reduced learning across generations. Our findings emphasize the importance of caste identity in coordinating workers into occupational networks which enable productivity spillovers.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
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Previous	nber w2846 Comovements in Stock Prices and Comovements in Dividends /	nber w28460 Biosimilar Competition: Early Learning /	nber w28461 The Work-from-Home Technology Boon and its Consequences /	nber w28462 A Division of Laborers: Identity and Efficiency in India /	nber w28463 Gender Quotas and Support for Women in Board Elections /	nber w28464 The Analytic Theory of a Monetary Shock /	nber w28465 Learning from Shared News: When Abundant Information Leads to Belief Polarization /	Next

February 2021.

Workers' social identity affects their choice of occupation, and therefore the structure and prosperity of the aggregate economy. We study this phenomenon in a setting where work and identity are particularly intertwined: the Indian caste system. Using a new dataset that combines information on caste, occupation, wages, and historical evidence of subcastes' traditional occupations, we show that caste members are still greatly overrepresented in their traditional occupations. To quantify the effects of caste-level distortions on aggregate and distributional outcomes, we develop a general equilibrium Roy model of occupational choice. We structurally estimate the model and evaluate counterfactuals in which we remove castes' ties to their traditional occupations: both through their direct preferences, and also via their parental occupations and social networks. We find that the share of workers employed in their traditional occupation decreases substantially. However, effects on aggregate output and productivity are very small-and in some counterfactuals even negative-because gains from a more efficient human capital allocation are offset by productivity losses from weaker caste networks and reduced learning across generations. Our findings emphasize the importance of caste identity in coordinating workers into occupational networks which enable productivity spillovers.