Proceedings of the German Development Economics Conference, Berlin 2011 32
We study the impact of inter-group relationships, with inter-group distance, on intra-group cooperation behavior for Indian rural households. This is an application to a real world case of some experimental results of the identity economics literature. This literature offers insight of channels through which inter-group relationships affect in-group actions, with identification to the in-group, and the resulting norm enforcement behavior. We proxy distance with differences of returns to attributes to one traditionally low status group (the Scheduled Castes, SC, standing for traditionally so-called untouchables), compared to the rest of the population (reference group). We then study the effect of this distance variable on in-group cooperation. In our data set, a cooperative behavior corresponds to the involvement in a collective action for water supply. Inter-group relationships appear to have the expected effect on intra-group cooperation for SC and households: the worst inter-group relationships, the more intra-group cooperation.