Abstract:
How do systemic modes of discrimination-such as a caste system, or racial bias-impact the transmission of intergenerational opportunities in a developing country? What are the mechanisms by which discriminatory norms in labour and marriage markets affect such opportunities? How could we measure such 'opportunities' over time-using nationally representative cross-sectional data-so as to derive their impact on relative poverty and class formation over time? In this paper, we use a novel approach using 'theoretical experiments', consisting of simulating steady-state observations (i.e., drawing 'synthetic data') from a dynamic, overlapping-generations data-generating process, to understand the relationship between class formation, long-run poverty status, and caste-related norms in Indian labour and marriage markets. We demonstrate the distinction-and communication-between mechanisms that transmit relative and absolute poverty over time in a society characterized by systemic discrimination in the labour market, offering suggestions for which policy tools would best achieve the separate goals of (i) reduction in relative poverty (or upward class mobility), versus (ii) reduction in poverty intensity, versus (iii) reducing the excess burden of poverty (absolute and relative) on traditionally disadvantaged groups.
