Title: Chasing Government Jobs: How Aggregate Labor Supply Responds to Public Sector Hiring Policy in India
Author: Kunal Mangal
Discussant: Christina Brown

We conducted the 14th Consumer Pyramids Research Seminar on 9 September 2021 at 06.30PM IST.

Event Summary

Kunal Mangal, from the Centre for Sustainable Development, Azim Premji University, presented findings from his study based on the Indian system of competitive exams for government jobs. Several candidates are known to dedicate a significant portion of their 20s towards exam preparation, leading to the concern that people are opting for unproductive preparation in lieu of productive activity. The author investigated whether such selective exams actually affect the broader economy as is believed.

For the purpose of his study, the author exploited a partial hiring freeze in Tamil Nadu between 2001-2006 and employed a difference-in-differences approach, with cross-state, and cross-cohort comparisons.

The results indicated that the hiring freeze led to an increase in the amount of time spent studying, rather than a decrease. Additionally, the candidates suffered both economically and socially they shifted into lower-paying occupations over the long term, and were less likely to marry and more likely to stay at home with their parents. Lastly, the study found that returns to exam preparations were convex, which encouraged candidates to study more despite the lack of vacancies.

Christina Brown, who served as the discussant for the paper, emphasized the large magnitude of the effects estimated by the study. She commented on the significance of such a hiring freeze for the entire labour market. She suggested looking at simultaneous effects of the shock to the state budget on the labour market, and outlined the scope for future work on the subject.

The webinar concluded with a lively discussion wherein Mangal responded to the suggestions, and took questions from the audience.

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