Manuscript Caste dominance and economic performance in rural India Vegard Iversen£, Adriaan Kalwij$, Arjan Verschoor* and Amaresh Dubey** £IDPM, University of Manchester, e-mail:
[email protected] $ Utrecht University, *University of East Anglia, * *Jawaharlal Nehru University 1 ABSTRACT Using household panel data for rural India covering the years 1993/94 and 2004/05, we test whether Scheduled Caste (SC) and other minority groups perform better or worse in terms of income when resident in villages dominated by (i) upper castes or (ii) their own group. Theoretically, upper caste dominance comprises a potential 'proximity gain' and offsetting, group-specific 'oppression' effects. For SCs and OBCs, initial proximity gains dominate negative oppression effects because upper caste dominated villages are located in more productive areas: once agroecology is controlled for, proximity and oppression effects cancel each other out. Albeit theoretically ambiguous, we find large, positive own dominance or enclave effects for Upper Castes, OBCs and especially SCs. These village regime effects are restricted to the Hindu social groups. Combining pathway and income source analysis, we close in on the mechanisms underpinning identity-based income disparities; while education matters, land ownership accounts for most enclave effects. A strong post reform SC own village advantage turns out to have agricultural rather than non-farm or business origins. We also find upper caste dominance to inhibit the educational progress of other social groups along with negative enclave effects on the educational progress of Muslim women and ST men. 2 I INTRODUCTION IA. Aim and motivation In economics, various mechanisms are recognized that, in a stratified society, link economic welfare with signifiers of social identity such as caste, religion and ethnicity.