Characterizing social networks and their effects on income diversification in rural Kerala, India

Abstract

Social context is an important determinant of income diversification. In India, caste and ethnicity provide the basis for multi-functional social networks. This paper considers the effects of intra-village social networks on household income diversification in one of the poorest and most ethnically diverse areas of Kerala, India. Using techniques adapted from spatial econometrics, findings show that average diversification of a household’s social network has a positive effect on its income diversification by a factor of 3.6. Results of the study suggest that social stratification in villages with higher levels of stratification are associated with lower levels of income diversification.