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

54 Pages Posted: 7 Apr 2009 Last revised: 28 Dec 2014

See all articles by Kaivan D. Munshi

Kaivan D. Munshi

Brown University - Department of Economics

Mark R. Rosenzweig

Yale University - Economic Growth Center; Yale University - Cowles Foundation

Date Written: April 2009

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.

Suggested Citation

Munshi, Kaivan D. and Rosenzweig, Mark Richard, Why is Mobility in India so Low? Social Insurance, Inequality, and Growth (April 2009). NBER Working Paper No. w14850. Available at SSRN: https://ssrn.com/abstract=1372954

Kaivan D. Munshi (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Box B
Providence, RI 02912
United States
401-863-9331 (Phone)
401-863-1970 (Fax)

Mark Richard Rosenzweig

Yale University - Economic Growth Center ( email )

Box 208269
New Haven, CT 06520-8269
United States
203-432-3620 (Phone)

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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