Effects of caste-based affirmative action in governance on socio-economic networks and resource provision

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We study the impacts of political affirmative action for historically disadvantaged caste groups in Bihar, India on village social and economic networks. These networks shape the socio-economic landscape, serving many functions such as facilitating social learning or forming the basis for informal institutions. To estimate the causal impacts of the policy, we conduct surveys in communities around the discontinuity in the state government’s policy assignment rule. We have two main findings. First, the marginal constituency assigned to the \emph{reservation} policy experiences a drop in cross-caste network links and an increase in homophily. Consistent with increased homophily, reservation leads to less social learning when information is introduced to the community. Second, we find that the reservation improves access to redistribution schemes. Both lower and upper castes benefit, indicating no crowd-out at the expense of upper castes. Strikingly, we find no change in the salience of caste concerns, no shifts in beliefs about trustworthiness, competence, or work ethic, among others, across caste. Our findings suggest that there is scope for pairing reservation with other interventions to mitigate the impacts of affirmative action on fractionalization while preserving the resource allocation benefits.