# 1. **Introduction**

Most of the academic literature on caste and inequality in India is based on surveys that use caste categories that are used by the government of India, such as Scheduled Caste (SC) and Scheduled Tribe (ST).<sup>i</sup> In everyday life however, caste identity is experienced and practiced as _jāti_ (henceforth, jati) (Srinivas 1976; Beteille 1996; Kumar and Somanathan 2017). Jatis are hereditarily formed endogamous groups whose identities are manifested in a variety of ways: occupational status, property ownership, diet, gender norms, social practices, and religious practices emphasizing purity and pollution. Each region of India has several hundred jatis. There is no pan-Indian system of ranking them, and the local rankings of jatis routinely change (Srinivas 1976; Bayly 2001; Rao and Ban 2007). Placement of jatis in broad government “caste” categories is complicated, and affected by politics and the level of mobilization achieved by the group (Rao and Ban 2007; Jaffrelot 2011; Cassan 2015).

This paper contributes to the literature on caste and inequality in rural India by analyzing inequality between and within jatis in rural areas of Bihar, one of India’s poorest states. The data were collected in 2011 with the intention of conducting an impact evaluation of a state-run rural livelihoods projects called JEEViKA.<sup>ii</sup> Though our sample is not representative of the population of the entire state, it is representative of poor populations in rural areas who are currently eligible for a variety of poverty-alleviation programs. Rich information on caste, jati, consumption expenditure and vulnerability makes the data suitable to understand the relationship between caste, jati, socio-economic status, and access to poverty alleviation programs.

Caste inequality is a form of an “inequality trap”(World Development Report 2006), driven by social structures that persist over generations. We know that it is a strong predictor of inequality and poverty. Household surveys confirm that the lowest castes continue to be disadvantaged relative to the broader population (Dreze and Sen 2002; Government of India 2014, 2017; Deshpande 2001, 2004; Thorat 2009; Desai and Dubey 2012). Though there is a declining gap in educational attainment at the primary-school level, there are persistent disparities by caste at higher levels of education and in labor markets (Desai and Kulkarni 2008; Thorat 2009; Thorat, Vanneman, Desai and Dubey 2017).

This raises the important question of the extent to which total inequality is driven by jati. Several papers decompose overall inequality into two components: the sum attributable to differences in mean outcomes across caste-groups, and to differences within those groups.<sup>iii</sup> Using a taxonomy of religious and caste groups in the India Human Development Survey, Boorah, Diwakar, Naik and Sabharwal (2014) for example find that inequality _between_ government defined caste groups contributes 11 percent of total inequality in monthly consumption expenditure. Similar estimates are seen in Mutatkar (2005) and Subramanian and Jayaraj (2006). Lanjouw and Rao (2011) use a decomposition method adapted from Elbers, Lanjouw, Mistiaen and Ozler (2008) (known as the ELMO measure) to show that between-jati inequality in income in a North Indian 2