The Impact of Caste on Income Disparity in India Today. A Pan-India Panel Data Approach

India has enacted several affirmative action policies since the 1990s to benefit the lower castes. This paper investigates if caste still affect an individual’s income in India today. Previous studies in this field have focused on specific regions or castes, and there is a dearth of pan-India empirical studies using panel data to investigate the relationship between caste and income. There is also a lack of studies that highlight the factors that help accentuate or ameliorate the caste-based income disparity in India. This paper addresses these gaps. The sample used for this paper is composed of respondents from all across India. Using the Indian Human Development Survey (IHDS) panel data, it is found that although the impact of caste on income has reduced, lower caste individuals’ income is still lower than that of their upper caste counterparts. The paper also finds evidence that the effects of caste on income are ameliorated in rural areas and that higher state-level GDP per capita and attainment of at least high school-level qualifications also contribute to reducing the impact of caste on income. Finally, this paper finds that the lower the caste, the stronger the ameliorating effect of attaining a high school-level qualification and state-level GDP per capita.