Friday, September 07, 2012

Kuffir on the efficiency of caste

mostly about economic efficiency in Caste is not efficient or capable. The thrust of the post comes from a paper of Abhijit Banerjee and Kaivan Munshi
How efficiently is Capital Allocated? Evidence from Knitted Garment Industry in Tirpur
From Kuffir's account ( the last paragraph is quote from the paper):
To sum up, roughly, the Gounders employ more capital than the Outsiders but dont get better results than them. Caste isn't efficient.

But the Gounders can start garment units more easily, get easier access to capital and labour, rely on better co-operation from local authorities, and can stick around longer (even if they are not as efficient as the Outsiders) because of what the researchers call the 'community effect' (or plain old caste loyalty, in other words). But despite all those advantages:
 In our data the Outsiders seem to outperform the Gounders. This is easiest to see by comparing the Gounders and Outsiders who have more than 5 years of experience. The Outsiders in this category own less capital stock than the corresponding Gounders. Yet they produce significantly more. Moreover, the growth rate of output is higher for the Outsiders with more than 5 years of experience compared with the corresponding Gounders, which rules out the possibility that the Gounders are trading off current productivity for future growth. Finally, these Gounders use more capital per unit of output and own more capital stock at every level of experience: everything else being the same, this should give them a higher growth rate. The slower growth of the Gounders is therefore in spite of this additional advantage. 

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