Cultural Capital and Economic Opportunity in Rural India

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Cultural capital — defined in this paper as specific human capital that lowers the cost of cooperating with the people who control resources — has long been a major field of research in sociology. Economics has been slow to study this concept because of the difficulty in measuring cultural capital and in finding suitable empirical settings to study its effects. Leveraging novel data on the cultural norms of each one of India’s nearly 5,000 endogamous social groups (castes, tribes, etc.), we generate a new measure of cultural capital by calculating the cultural distance between each of India’s groups and the economically dominant group in every village, whose control of land gives them significant power over their neighbor’s economic, social, and political lives. We use a difference-in-differences strategy that compares members of the same group who have differing levels of cultural capital due to differences in the dominant group across villages. We find that individuals living in villages with culturally distant dominant groups experience large reductions in educational attainment, health, consumption, and income per capita.