7 characteristics of households from the same caste but not having agriculture as their main activity, _UnonAGRc_ . Given the social structure of India, assuming that unobserved characteristics are correlated within castes across occupations seems reasonable. This assumption is discussed in more detail in section 5.<sup>5</sup>

# **3. Data and Descriptive Statistics**

## Data and Variables Definition

The data used to conduct this study are the ARIS-REDS data from the National Council of Applied Economic Research (NCAER). Since 1971, the NCAER has been conducting surveys on a _sample_ of households in 232 villages in the 17 major states of India. Most of the results come from the round of 2006, which has the advantage of providing a _listing_ of every household in the surveyed villages with basic information on households and heads of household such as their demographic characteristics (gender, age, education level, size of the household) and their main occupation. The average level of education of members from the same caste can therefore be computed using all the heads of the households from the same caste in the village and not only the heads of the households that have been sampled, which makes the measure very precise. The information on education from the listing is also useful to deal with measurement error in education of the head of household, as is shown in section 4. The round of 1982 is used for robustness checks.

In the round of 2006, detailed information about agricultural inputs, such as cultivated area or labor use, is not provided in the listing, so the analysis is restricted to households that cultivate land in the _sample_ . The identification strategy also requires at least two castes per village and that at least one caste has households that do not have agriculture as their main activity and households that have agriculture as their main activity. The final sample is composed of 4405 households in 223 villages.

The first set of variables includes the agriculture-related variables, used to estimate the production function. The dependent variable is total agricultural output of households.<sup>6</sup> As most households cultivate several crops, the different crops are aggregated, using their value in rupees declared by the household. When the production function is estimated separately for wheat and rice, total agricultural output is a quantity, measured in quintals (100 kilograms). The factors of production are the area of land cultivated (in acres), the number of days worked on the land (this measure includes family workers as well as hired labor), and variables proxying for the capital used, namely mechanized assets and nonmechanized assets. Mechanized assets and nonmechanized assets are dummy variables equal to one if the household respectively owns at least one mechanized or one nonmechanized asset.<sup>7</sup> Additional controls include the

- 5 It is also worth noting that _δ_<sup>ˆ</sup> _o_ and _δ_<sup>ˆ</sup> _nonAGRc_ provide insights into the bias in the estimates of the other parameters of the production function. Production functions are typically hard to estimate because inputs are endogenous. Finding that _δ_<sup>ˆ</sup> _o_ ≈ 0 and _δ_<sup>ˆ</sup> _nonAGRc_ ≈ 0 mean that the estimates of the other coefficients of the production function can be interpreted as the true coefficients if the omitted determinants of productivity are correlated across castes or within castes across occupations.

- 6 The focus is only on field crops. Plantation crops, such as coffee or tea are excluded, to keep some homogeneity in the sample. It is however not a strong restriction because only six households in the data cultivate plantation crops.

- 7 Mechanized assets include tractors, trailers, threshers, electrified motors, nonelectrified motors (oil engine), gauge wheels, plows, tractors with trailer, tractors with thresher, tractors with oil engine, tractors with gauge wheel, tractors with plough, disc harrows, tillers or cultivators, plow discs or mould boards seed drills, power tillers, power sprayers, chaff cutters, cane crushers, combine harvesters. Nonmechanized assets include iron ploughs, cultivators, harrows, levelers, hoes or manual earth removers, seed drills, weeders, sprayers or dusters, winnowers or pitch forks, bullock carts, chaff cutters,  sickles, scissors.