Caste, Parochial Politics, and Governments

This paper by Kaivan Munshi & Mark Rosenzweig proposes a novel explanation for the emergence and persistence of parochial politics, based on the idea that strong social institutions can discipline the leaders they put forward, successfully substituting for secular political institutions when they are ineffective. Using unique data on Indian local governments at the ward level over multiple terms, and exploiting the randomized election reservation system, they find that the presence of a numerically dominant sub-caste (caste equilibrium) is associated with the selection of leaders with superior observed characteristics and by greater public goods provision. This improvement in leadership competence occurs without apparently diminishing leaders' responsiveness to their constituency.