Academic journal article Indian Journal of Economics and Business

Social Norms and Occupational Choice: The Case of Caste System in India

Academic journal article Indian Journal of Economics and Business

Social Norms and Occupational Choice: The Case of Caste System in India

Article excerpt


The paper attempts to examine the direct and indirect impact of caste related social norms on occupational choice in India. Two caste groups, Jat and Bania, are compared for this purpose. Banias and Jats live at the same place and enjoy similar social and economic status, however they show difference in their choices of occupations. These differences cannot be explained on the basis of differences in education, asset or returns on investment only. The findings show that when a society is divided into groups, and there are significant barriers to separate those groups, the choice of members of a group is influenced by perceived identity and knowledge base of the group.

JEL classification: DO2, D82, Z13

Keywords: social norms, caste system, occupational choice, social relation and perceived identity.


Social norms are informal laws of the society. Here, society acts as an institution, which makes and executes the law, and punishes those who break the law. Social norms always have some type of punishment in case of non-compliance, which can be in the form of physical punishment, social stigma, non-cooperation and the feeling of guilt. For instance, feeling of shame and guilt create unpleasantness for people. Social norms related to fairness, trust, reciprocal altruism and honesty play an important role in various decisions and significantly affect the level of economic activity (Basu, 2000; Trivers, 1971; Kahneman et al., 1986). A social norm, which ensures mutual trust in a society, can benefit economy by increasing the level of economic activity. But it is not so in the presence of norms which are deterrent to the economic activity. Furthermore, social norms can affect individual decisions either directly by entering the utility function as happens in the case of identity formation; or indirectly by providing social capital through norms of cooperation, reciprocal altruism etc. (Basu, 2000; Akerlof 1976, 1980, 1997; Akerlof and Kranton, 2005; Lindbeck et al., 1999). Therefore, there is immense need to study the impact of social norms on the various economic activities.

In India, many important social norms, which directly or indirectly have huge impact on Indian society, are related to caste system. A person belongs to a caste by birth. In past, it was the caste (to which one belongs) of a person, which used to decide his/her occupation as well as social status in India. Though, caste based discrimination is legally prohibited in post-independent India and caste based dominance on occupations has come down, it has not lost its importance and one can find large difference in occupational structure and welfare level of the upper and the lower caste groups (Sengupta, Kannan and Raveendran, 2008). In comparison, some convergence is noticed in the occupational structure of upper castes. Damodaran (2008) found that the non-business upper castes in many regions are also moving into the business. Nonetheless, the study also noted that certain agricultural castes of northern India, especially Jat, could not make the transition from agriculture to business or industry, and business is still dominated by business castes. This dominance is not maintained by any strict punishment like out-casting or any legal rules. Interestingly, these upper caste groups, which are different in their occupational choice, are often similar in their educational attainments, and socio-economic status. Therefore, it becomes important to look into the underlying processes responsible for these differences. However, there is hardly any study, which has examined the difference among upper castes in occupational choice. The present study is an attempt to fill this gap.

The paper is based on two castes in state of Punjab, Bania and Jat. Here, Bania is a business caste, whereas Jats are agriculturists. Both, Banias and Jats live at same place, are exposed to similar opportunities, enjoy same social status and have similar educational attainments. …

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