The Effect of Welfare on Caste Networks and Identity in India

• In Event: Non-state Welfare and Identity in the Global South

Abstract

I study the impact of the welfare state on a function traditionally performed by caste networks in India: providing social insurance. As the welfare state expands, do individuals rely less on their caste networks to deal with shocks to their incomes and livelihood? Further, as economic reliance on caste diminishes, does that affect caste identity and inter-caste relations? I focus on an income support program for farmers in the state of Telangana in India, which provides Rs. 10,000 (USD 125) per acre per year to each eligible farmer. Using panel data on borrowings in a difference-in-differences strategy, I find that RBS had a large effect on caste-based social insurance, reducing borrowings from caste members by nearly 40%. Next, I use data on caste identity from an original survey of 3,020 households along the border between the states of Telangana and Andhra Pradesh. To identify the causal effect of welfare on inter-caste relations, I compare the landed and the landless on both sides of the state border. On average, I find that welfare has positive effects on intergroup relations. However, the average effects conceal an important heterogeneity by group-based inequality in land ownership. The positive effects are driven largely by villages with lower group-based inequality in land ownership. In these villages, welfare increased the extent to which respondents reported sharing meals with people of other castes, and the extent to which they believed that others in the village also shared meals with those of other castes. Further, welfare significantly reduced the likelihood of respondents reporting conflict among castes in the village, as well as the likelihood of them reporting that most or all of their friends were from the same caste. Finally, welfare significantly increased the amount that respondents were willing to donate to an NGO working to educate children of the historically marginalized scheduled castes. My findings highlight the potential of the welfare state in creating social change, while illuminating the powerful role of inequality in moderating the effects of welfare on identity and intergroup relations.

Author

• Akshay Govind Dixit, Harvard University