Social Structure and Entrepreneurship: Welfare Consequences of Employment Choice in Rural and Urban India

Abstract

Does social structure of the region (in which the individual resides) influence the employment choice of the individual? What are the welfare consequences of employment choice in developing countries? This paper addresses these research questions by comparing the welfare consequences of employment choice – selfemployed, casual labor, employers, and salaried employees – in rural and urban India. We observe that social structure of a region is strongly associated with entrepreneurial choice and welfare outcomes of various socioeconomic groups. Relative welfare of lower caste individuals, compared to other backward caste and upper caste individuals is significantly lower in districts with higher degree of social and economic stratification.