Posted by: Vikram | November 5, 2012

Trends in inequality between caste groups in India

One of the major themes I have tried to cover in this blog is the history, activism and evolving culture of the Dalits in India, officially called Scheduled Castes or SCs. I have also shared material regarding India’s tribal populations (Scheduled Tribes or STs). Taken together, the SC/STs form a large chunk of the marginalized people in India. Their progress is perhaps the most important metric by which the Indian Republic must be judged. Therefore, I was excited when a Pratap Bhanu Mehta article in the Caravan pointed me to the paper ‘Castes and Labor Mobility‘ by Viktoria Hnatkovska, Amartya Lahiri and Sourabh Paul of the University of British Columbia.

The SC/STs of India have faced marginalization due to their low access to education, occupational rigidities prescribed by the caste system and consequent lower incomes. However, the paper presents evidence for significant convergence between the SC/STs and non-SC/STs in all these areas. Indeed they summarize their key findings as follows,

First, we find significant convergence in the education attainment levels and the occupation distribution of SC/STs and non-SC/STs between 1983 and 2004-2005. Second, we find a statistically significant trend of convergence of consumption and wages for the two groups. The median wage premium of non-SC/STs relative to the SC/STs has declined systematically from 36 % in 1983 to 21 % in 2004-05. Third we find that the overall consumption and wage convergence between the groups has been driven significantly by education choices ..

Thus, the SC/STs appear to have participated quite successfully in India’s recent economic expansion. And they have been able to do so because they have narrowed their education gap with the other castes and have had increased occupational mobility.

The paper first discusses the education data. The key findings here include the fact that the gap in the average years of schooling between SC/STs and non-SC/STs has shrunk from 2.57 years in 1983 to 1.74 years in 2004-05. It must be noted that the average years of schooling for SC/STs in 2004-05 (3.19 yrs) were lower than those for non-SC/STs even in 1983 (3.62), but education for SC/ST children has expanded at a much faster rate in the last twenty years. An important question is, in which part of the educational achievement distribution is the convergence more prominent ? In other words,

is the change in the average years of schooling due to more illiterates going to primary school or is it primarily due to more  people going on to middle school or higher ?

Figure 1 sheds light on this question.

Figure 1: The proportions of secondary and above (Edu 5), middle (Edu 4), primary (Edu 3), literate but below primary (Edu 4) and illiterate (Edu 1) persons in the non-SC/ST and SC/ST populations.

We see that SC/ST education has expanded at all levels, right from basic literacy (Edu2) to secondary and higher education (Edu5). It is interesting to speculate on how much the expansion of SC/ST higher education is driven by reservations. However, the authors of the paper do not tackle this particular question.

The second factor discussed in the article is occupational flexibility. Figure 2 shows the distribution of the non-SC/STs and SC/STs across three different occupation types: agriculture and allied activities (Occ3), blue collar jobs like sales, service and production workers (Occ2) and white collar jobs such as administrators and managers (Occ1).

Figure 2: The proportions of white collar (dark grey), blue collar (light grey) and primary (medium grey) workers in non-SC/ST (left) and SC/ST (right) populations.

The authors point out that

the largest expansion in the employment share of both groups has been in Occ2 which comprises mostly low skill blue collar and service sector jobs.

Thus the twenty year period between 1983-2004 has seen SC/STs move from their traditional caste occupations to other categories of work.

The authors then move on to analysis of the wage and consumption data. The inflation-adjusted wage data is summarized by Figure 3, which gives us the distribution for the income levels for SC/STs and non-SC/STs for two different years, 1983 and 2004-05. We can first contrast the curves for just the non-SC/ST group. We see that the mean of the non-SC/ST curve has moved significantly to the right, indicating an about 10-times increase in wages for an average non-SC/ST household between 1983 and 2004. We also note that the right side tail of the 2004 curve is much thicker than the left side tail. This means that the number of relatively more affluent non-SC/ST households has increased with India’s broader economic growth.

Figure 3: Income distribution curves for non SC/STs and SC/STs for the years 1983 and 2004-05.

For the SC/ST curves, we observe a rightward shift similar to the one observed for the non-SC/ST curve. We also observe a similar thickening of the right hand tail for the 2004 curve. Thus, India’s economic expansion has created a relatively large ‘middle-class’, with both non-SC/ST and ST households. Summarizing, as of 2004, SC/STs and non-SC/STs are equally likely to be extremely poor, SC/STs are more likely to be poor or lower middle class, and non-SC/STs are more likely to be middle/upper middle class.

The authors also point out an interesting contrast between inequality levels in India and the US,

Between 1980 and 2006, the median wage of black males relative to white males [in USA] has remained stable around 75 %. During the same period, the median wage of Hispanic men relative to white men declined from 71 % to under 60 %. In contrast, … the median wage of SC/STs relative to non-SC/STs has increased secularly from 64 % in 1983 to 79 % in 2004-05.

India’s SC/STs still have a lot of catching up to do, but the trend is very encouraging. With the recent political empowerment of SCs in north India, one would anticipate the rate of convergence to quicken. Note that although the wage gap between different castes has narrowed, the gap between the top earners and others has increased.

The authors then present further analysis to explain the reasons for the convergence in income levels (see Figure 4). According to their statistical models, most of the caste wage gap in India has been closed due to convergence in educational levels as opposed to demographic factors and reservation quotas. Opponents of reservation will perhaps be inclined to use this as evidence for the non-necessity of reservations. However, one must bear in mind the important role reservations play in the convergence of educational attainments, by powerful signalling mechanisms at lower levels and direct access at higher levels. They also play a critical role in the political empowerment of the marginalized groups and in increasing their presence in the governing institutions of the country.

Figure 4: Caste wage gap between SC/STs and non SC/STs for the year 2004-05. Notice that the wage gaps are smaller at the lower end of the curve and larger at the top.

The authors conclude with speculation on the reasons for the convergences discussed above,

increasing competition raises the losses to businesses from pursuing wage discrimination. The resultant decline in the wage gap could then also induce the disadvantaged groups to increase their education attainment rates since the returns to education rise. A second factor may be the rise of community based networks of SC/STs as suggested by Munshi (reference in paper). The third possibility is that the reservations policy in place since 1950 for public sector jobs and higher education seats may have played a key role …



  1. […] democracy has seen many successes. India’s oppressed Dalits have seen social and economic gains. Women have joined the educated classes and workforce in impressive numbers. A hugely diverse […]

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