TY  - JOUR
AU  - Munshi,Kaivan
AU  - Rosenzweig,Mark
TI  - Why is Mobility in India so Low? Social Insurance, Inequality, and Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14850
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14850
L1  - http://www.nber.org/papers/w14850.pdf
N1  - Author contact info:
Kaivan Munshi
Professor
Department of Economics
Brown University
Box B/ 64 Waterman Street
Providence, RI 02912
Tel: 401-863-9331
Fax: 401-863-1970
E-Mail: munshi@brown.edu

Mark Rosenzweig
Department of Economics
Yale University
Box 208269
New Haven, CT 06520
Tel: 203/432-3588
E-Mail: mark.rosenzweig@yale.edu
AB  - 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.
ER  -