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

Kaivan Munshi and Mark Rosenzweig

No 121, CID Working Papers from Center for International Development at Harvard University

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.

Keywords: mobility; India; insurance; growth (search for similar items in EconPapers)
JEL-codes: J12 J61 O12 (search for similar items in EconPapers)
Date: 2005-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

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Working Paper: Why is Mobility in India so Low? Social Insurance, Inequality, and Growth (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cid:wpfacu:121

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