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How does Caste Affect Entrepreneurship? Birth vs Worth

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  • Sampreet Singh Goraya
Abstract
This paper examines the relative importance of the caste system in explaining the resource misallocation in India and quantifies its impact on aggregate productivity. I document that the historically disadvantaged castes (LC) are less likely to enter entrepreneurship even though they are more productive on average. At the intensive margin, the LC entrepreneurs are less capital-intensive but have higher marginal revenue product of capital relative to high castes. In a quantitative model of entrepreneurship, I find that the LC face higher entry cost and stricter financial constraints and that such asymmetries reduce aggregate TFP by 2.54% and output by 6%.

Suggested Citation

  • Sampreet Singh Goraya, 2019. "How does Caste Affect Entrepreneurship? Birth vs Worth," Working Papers 1104, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1104
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    More about this item

    Keywords

    misallocation; productivity; caste system;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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