How does caste affect entrepreneurship? birth versus worth

Sampreet Singh Goraya

Journal of Monetary Economics, 2023, vol. 135, issue C, 116-133

Abstract: Informal institutions play an important role in resource allocation across entrepreneurs in developing countries. I focus on the caste system in India and document three stylized facts. First, entrepreneurs of historically disadvantaged castes have a higher average revenue product of capital, arpk, relative to high-caste enterprises. Second, cross-caste differences in arpk are driven by small enterprises. Third, the majority of these differences are concentrated in financially underdeveloped regions. In a model of entrepreneurship, I find that the cross-caste differences in arpk are explained by differences in access to credit and that such asymmetries reduce output per capita by 5.6%.

Keywords: Misallocation; Caste system; Credit constraints; Entrepreneurship (search for similar items in EconPapers)
JEL-codes: D24 D61 E44 O11 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:135:y:2023:i:c:p:116-133

DOI: 10.1016/j.jmoneco.2023.01.007

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