Information frictions in developing country labour markets can lead firms and workers to make suboptimal matching decisions, reducing productivity and wages while increasing costly turnover. Erica Field, Robet Garlick and Kate Vyborny will undertake a series of audit-related interventions to alleviate information frictions in the labour market in Lahore, Pakistan. This auditing study is motivated by concerns from firms that applicants misreport or exaggerate educational qualifications and prior work experience. Firms can use verification methods like checking qualifications and contacting references during hiring but this can be expensive, time-consuming, and complex, particularly for firms that hire infrequently and lack sophisticated human resource departments.
As a part of work supported by a PEDL ERG (Transport and Recruitment of Female Workers: A Randomised Controlled Trial), a successful city-wide labour market platform that matches applicants to firms while generating high-frequency data on labour supply and demand was developed. Through three interlinked auditing experiments, they will use this platform to study the effects of actual and threatened skills audits on applicants’ skill reporting decisions, applicants’ skill investment decisions, firms’ hiring decisions, and firm-applicant match quality. First, they will randomise whether firms hiring on the platform see pools with all, some, or no audited applications so as to measure firms’ valuation of audits based on their hiring decisions and the effect of audit-based hiring on subsequent productivity. Second, they will randomise whether applicants are told that the skills they report on our platform will be audited so as to measure the effect of auditing on misreporting and job application decisions. Third, they will invite applicants to participate in skills training and assessments and randomise whether the assessment results are shared with firms when they apply for jobs through the platform so as to measure whether applicants facing the risk of audits are more likely to invest in skills training.
The project involves a close collaboration with the Punjab Commission on the Status of Women (PCSW), a government agency focused on the advancement of women in Pakistan’s largest province. As a part of this broader partnership, PCSW has engaged the Center for Economic Research in Pakistan (CERP) to both implement and conduct an impact evaluation of pilot employment facilitation services for educated women. The results of the this research will add to the broader knowledge base being developed on the constraints to female employment in Pakistan, and thus inform design of future PCSW policies and programs designed to improve women’s access to job opportunities. More broadly, the project will help to build an evidence base that will inform policies on employment policies relevant to labor markets in many developing world economies.
