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Self-fulfilling Equilibrium and Social Disparities in Urban India
This article examines the persistence of group-based disparities in education and labour market outcomes in India. It argues that a possible reason responsible for this phenomenon is the existence of a self-fulfilling equilibrium trap. The social belief that certain groups are inferior leads to discrimination against them; over time, however, these communities start behaving in a manner that justifies society's perceptions about them, reinforcing and perpetuating initial disparities. The study uses NSSO data from the 68th round.
This paper was presented at a conference on âIssues in Economic Theory and Policyâ organised by Economics Department, Presidency University on 2 November 2016.
We are grateful to the session chairperson, Achin Chakrabarty, for his encouragement and suggestions. The comments of the anonymous reviewer greatly sharpened the thrust of this paper. Any remaining errors remain our responsibility.
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