Paper short abstract:

We look at caste based occupational rigidities and investigate whether the free market can facilitate individuals of stigmatised castes to move from hazardous and 'dirty' occupations to more 'prestigious' occupations.

Paper long abstract:

The caste system in India is a system of stratified hierarchy (Gang et al 2012). It is perpetuated through occupational rigidity where people from lower caste backgrounds get locked in manual unskilled labor (Sen and Yun 2008). As shown by Nandy(2015), 62 percent of young men in India are employed in the same industry as their fathers. Using a district-level panel from National Sample Survey Data (NSSO), we examine the changes in the share of lower-caste individuals in prestigious and hazardous occupations in response to trade liberalization policies in India. We define an occupation as prestigious if they are among the top 10 percent based on education and wages. Contrary to the predictions of the taste-based discrimination model, we find an increase in the share of upper caste individuals in prestigious occupations. Additionally, we find a decline in the share of lower-caste individuals in non-hazardous occupations. We do not find any differences in the caste composition in routine, nonroutine, cognitive, and noncognitive occupations as defined by Autor et al (2013). Negative income shock (Topalova, 2010) and reduced education expenditure among the poor (Edmonds et al, 2010) appear to be the reason for the increase in the share of upper caste individuals in prestigious occupations. The shift in production technology leading to skill-biased technological change seems to be the other channel. Labor laws and differences in enforcement across states are other channels driving our findings.