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

Kaivan Munshi () and Mark Rosenzweig

No 14850, NBER Working Papers from National Bureau of Economic Research, Inc

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 income, assets, gifts, loans, consumption, marriage, and migration are used to link caste networks to household and aggregate mobility. Our key finding, consistent with the hypothesis that local risk-sharing networks restrict mobility, is that among households with the same (permanent) income, those in higher-income caste networks are more likely to participate in caste-based insurance arrangements and are less likely to both out-marry and out-migrate. At the aggregate level, the networks appear to have coped successfully with the rising inequality within sub-castes that accompanied the Green Revolution. The results suggest that caste networks will continue to smooth consumption in rural India for the foreseeable future, as they have for centuries, unless alternative consumption-smoothing mechanisms of comparable quality become available.

JEL-codes: J12 J61 O11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-ias and nep-mig
Date: 2009-04
Note: EFG
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Working Paper: Why is Mobility in India so Low? Social Insurance, Inequality, and Growth (2005) Downloads
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