Caste discrimination and transaction costs in the labor market: Evidence from rural North India

Abstract

This paper is an empirical attempt to quantify caste-based discrimination in the labor market using household data taken from rural North India. In the regression analysis, transaction costs associated with entry into the labor market and reservation wages are estimated simultaneously along with market wages. The estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment. In line with previous studies, the results suggest that the achievements of India's reservation policy so far have at best been limited. In addition, a comparison between the estimates from the model employed in this paper and conventional (reduced-form) approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced-form approaches.JEL classification codes: D23, J22, J24, J71

Weather Risk, Wages in Kind, and the Off‐Farm Labor Supply of Agricultural Households in a Developing Country

“…Looking at the role of castes, we find that households belonging to backward or scheduled castes are more likely to send members to perform agricultural wage work. This result is consistent with Ito's (2007) finding of occupational segmentation or job discrimination against the backward castes using the same dataset.…”

Castes and Labor Mobility

“…Borooah (2005) has studied discrimination in employment in the urban labor market. Ito (2009) has studied both wage and employment discrimination simultaneously by examining data from two Indian states -Bihar and Uttar Pradesh while Kijima (2006) has used NSS data to study consumption inequality of SC/ST households. In related work Munshi and Rosenzweig (2009) document the lack of labor mobility in India.…”

The Informal Labour Market in India: Transitory or Permanent Employment for Migrants?

“…However, other related factors that could also have an impact on an individual's labour supply, especially in the context of India, could be the family size (Brown et al 1980), family background, caste and religious affiliation (see for example Banerjee and Knight (1985) or Ito (2009)). Another less frequently studied factor that might be critical is the job related network, for example, job-opening information, formal and informal channels of job search and referral (see for example Holzer 1987 or Calvó-Armengol andZenou (2005)).…”