Understanding the Employment Preferences of Low-Skilled Labor in India

Globalization has provided firms the access to cheaper labour markets and with growing economies, there has been a rapid increase in the demand for skilled labour as well. With 756 million persons in the working age group of 15-59 years and the secondary and tertiary sectors contributing to over 43% of GDP, India has recognized the unique opportunity to harness these favourable labour market dynamics to its socio-economic advantage. As a result, skill development efforts were initiated across the country to help reduce the skill mismatch in the labour market by strengthening an individual’s ability to adapt to a changing labour market and technology environment. However, the experience of skill training institutions suggest two major challenges in the program – a low take-up rate of the training programs and the tendency of candidates to leave their jobs within a short period of their initial job placement. In this context, the primary goal of this study is to identify and capture the ‘true’ preferences of individuals with regard to various job characteristics and provide a rationale for their participation in vocational skill training programs.

The researchers will simulate artificial job choice sets that vary on pre-determined job characteristics and will ask participants in vocational training programs in India to rank a mix of real and simulated job choices without them being able to distinguish between the two sets. They will then analyse these preferences in the context of an individual’s socio-demographic characteristics, social networks, family background, and also use the preference ranking to distinguish between individual- and institutional- mismatch of jobs. They will also attempt to capture the degree of unrealistic labour market expectations through a randomized experiment in which participants are given an ex-ante probability of getting their most preferred job. The team will also use follow-up surveys to investigate the persistence of preferences and subsequent employment decisions.

Findings from this study will help in understanding job preferences, employment decisions, and their persistence across continued labour market interactions. The project will also contribute to the literature on the revelation of job preferences, the role of vocational training in India, and the nature of ex-ante labour market expectations in subsequent employment decisions, all of which have both academic and policy relevance.



Abhijit Banerjee

Massachusetts Institute of Technology

Gaurav Chiplunkar

University of Virginia