India experienced sustained economic growth for more than two decades following the economic liberalization in 1991. While economic growth reduced poverty significantly, it was also associated with an increase in inequality. Jean Dreze and Amartya Sen (2011) argue that Indian economic reform has been “unprecedented success” in terms of economic growth, but an “extraordinary failure” when it comes to improvements in the living standard of general population and social indicators. The contrasting news reports on billion dollar house (Mukesh Ambani’s house at Mumbai) and farmers’ suicides have brought the issue of income inequality to the spotlight for many people. Does the increase in inequality in post-reform India reflect deep-seated inequality of opportunity or efficient incentive structure in a market oriented economy?
In a recent working paper, “Gender, Geography and Generations: Intergenerational Educational Mobility in Post-reform India,” Shahe Emran and I try to provide a partial answer to this question. The paper focuses on educational attainment as an indicator of economic status. We provide evidence on educational mobility in post-reform India by using two related measures of immobility: intergenerational and sibling correlations. Intergenerational correlation measures the persistence in educational attainment between parents and children. A higher persistence implies that the children of better educated parents attain better education, thus replicating and reinforcing the existing educational inequality. The resulting income inequality can be sharper, as the returns to higher education have gone up significantly in India after the liberalization. Sibling correlation is a much broader measure of educational immobility, as it captures all the common factors experienced by the siblings growing up in the same household, including genetic traits, parental child rearing ability and preferences, peer effects, neighborhood characteristics such as schooling availability and quality.
Using data from National Family Health Survey (NFHS), we analyze the trends in and patterns of educational mobility in India from 1992/93 to 2006. The evidence shows that family background plays a strong role; the estimated sibling correlation in India is higher than the available estimates for Latin American countries for both the years. After two decades of high economic growth, the role of family background has remained largely unchanged for a majority of the population. Gender and geography are important “circumstances” for educational opportunities in post-reform India. There is a persistent gender gap against women in rural and less-developed areas. The degree of immobility is in general higher in the urban areas, which probably reflects, among other things, the growing importance of private schools in the urban areas. The only group that experienced substantial improvements is women in urban and developed areas. Interestingly, among the urban women, it is the women from lower caste who have made the most progress in educational mobility. The higher educational mobility of lower caste urban women is consistent with the recent evidence on improved occupational mobility among lower caste women in slums of Mumbai found by Munshi and Rosenzweig in their paper titled "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy" published in the American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September. In contrast men experienced little or no improvements in educational mobility, irrespective of caste, religion and geographic location. The significant gains in the educational mobility of urban women in general, and lower caste urban women in particular, are likely to be driven by changes in the economic environment, because genetic correlations among siblings and between parents and children cannot change in a span of 15 years. Almost 70 percent of the variance in children’s education can be accounted for by two factors: parental education and geographic location.
The evidence reported in the paper thus indicates that gender and geographic location are important for educational opportunities faced by children in post-reform India. This evidence is in sharp contrast to the existing evidence on developed countries where gender and geography (as measured by the neighborhood effect) do not seem to play a significant role in determining economic mobility across generations.