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Those Who Can't Sort, Steal: Caste, Occupational Mobility, and Rent-Seeking in Rural India

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  • Lawson, Nicholas

    (Princeton University)

  • Spears, Dean

    (University of Texas at Austin)

Abstract

Three important features of Indian labor markets enduringly coexist: rent-seeking, occupational immobility, and caste. These facts are puzzling, given theories that predict static, equilibrium social inequality without conflict. Our model explains these facts as an equilibrium outcome. Some people switch caste-associated occupations for an easier source of rents, rather than for productivity. This undermines trust between castes and shuts down occupational mobility, which further encourages rent-seeking due to an inability of workers to sort into occupations. We motivate our contribution with novel stylized facts exploiting a unique survey question on casteism in India, which we show is associated with rent-seeking.

Suggested Citation

  • Lawson, Nicholas & Spears, Dean, 2019. "Those Who Can't Sort, Steal: Caste, Occupational Mobility, and Rent-Seeking in Rural India," IZA Discussion Papers 12538, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12538
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    1. Bharathi, Naveen & Malghan, Deepak & Rahman, Andaleeb, 2023. "Ethnic diversity and economic development with spatial segregation," Economics Letters, Elsevier, vol. 222(C).

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    More about this item

    Keywords

    India; rent-seeking; occupational mobility; caste; labour markets in developing countries;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J47 - Labor and Demographic Economics - - Particular Labor Markets - - - Coercive Labor Markets

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