How important are matching frictions in the labor market? Experimental & non-experimental evidence from a large Indian firm
|Speaker:||Abhijit Banerjee, Massachusetts Institute of Technology|
|Date: ||Friday 11 December 2020|
|Location: ||Online via Zoom (link available from A.L.Bassett@exeter.ac.uk)|
This paper provides evidence of substantial matching frictions in the Indian labor market. In particular, placement officers in vocational training institutes have very little information about the job preferences of candidates who they are trying to place in jobs. We begin by adopting several methods to elicit genuine preferences of candidates over different types of jobs and show that: (a) there is a substantial variation in preferences over the same jobs and (b) placement officers have poor knowledge of it. We then provide placement officers with this information and examine its impact on placement and employment outcomes. We find that placement officers come close to efficiently matching candidates to job interviews and that there is an overall improvement in matching even after taking into account redistribution within a group of potential employees. Lastly, we find substantial improvement in the quality of jobs that the treated candidates end up with, as measured by their preferences.