Familiar strangers: Evidence from referral-based hiring experiments in India
Job Market Paper | Best Paper Award, 7th QMUL Economics and Finance PhD Workshop | Supported by The Weiss Fund and Mittal SAI
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Across developing countries, search and matching frictions in labor markets are associated with high turnover rates in entry-level jobs. At the same time, large fractions of the workforce remain without access to certain jobs. Firms often rely on referral‐based hiring in these settings to reduce search costs and improve match quality. However, these practices can systematically exclude underrepresented groups and exacerbate inequalities. This paper asks whether reallocating referral opportunities toward historically disadvantaged groups can improve firm performance and worker welfare, focusing on the role of caste in India. In a manufacturing firm in India, I experimentally increase the probability of referral opportunities being shared with lower caste incumbents. I find that this increases their representation by 15 percentage points (62%), and reduces turnover by 4 percentage points (41%) owing to worse outside options for these entrants. Output improves by 0.09 sd, and in contrast to the literature on the adverse effects of mixed teams on cohesion, I find no significant effects on this in my setting. A lab-in-field experiment establishes a mechanism driving the results: cohesion is lower by 9% when lower caste workers are hired as outsiders without links to incumbent workers, which reduces total team output by 22% relative to when these workers are hired through referrals.
The long shadow of feudalism: Concentration of land and labor market power in India with Steven Brownstone
Weiss Distinguished PhD Research Paper Award, NEUDC 2024 | Draft | Supported by The Weiss Fund, Harvard CID and UCSD 21CIC
Land is power. Governments and revolutionaries have understood this for centuries, but the causal impacts of land concentration are notoriously difficult to study. We study how differences in village land concentration stemming from the granting of feudal titles hundreds of years ago affect service delivery and labor markets in the present day. A fertile literature evaluates the effects of land tenure systems on agricultural productivity and downstream economic outcomes. However, most of this literature focuses on colonial and post-colonial land tenure policies, and evaluates a narrow set of agricultural and policy outcomes. We exploit variation in pre-colonial land tenure systems at a vastly more granular level than is seen in the literature to evaluate the impacts not only on service delivery but also labor markets. We implement a regression discontinuity along feudal borders that no longer correspond with modern administrative boundaries. Large discontinuities in land concentration persist across these boundaries. These differences are associated with 7% lower agricultural wages for women, but not men who are more able to travel and seek outside options. The main government scheme meant to provide an outside employment option is less well implemented in these areas with 71% fewer person-days offered during peak agricultural months and no difference the rest of the year. This work stresses the long lasting effects of land inequality and suggests that ensuring workers have more outside options can help reduce persistent rural inequities.
Between trust and trade: on informal credit networks in India with Layane Alhorr and Alp Sungu
Draft available upon request | [AEARCTR-0012890] | Supported by The Baker Retailing Center, Wharton School
We study store credit, a deferred payment system offered by small businesses to customers across the developing world. We collected data from local shops in an urban Indian settlement, randomly offering subsidies for stores to provide either store credit, a price discount, or a business-as-usual control. Store credit increased businesses’ market share by encouraging more visits and higher spending. Even after subsidies ended, stores continued to extend credit to treated customers. Customers who received credit during the experiment were equally likely to repay as stores’ standard credit customers and shifted some spending from non-credit stores to credit-offering ones. We find suggestive evidence that credit helps customers smooth consumption, and increase consumption expenditure overall. Our results underscore the role of small businesses as local lenders and explain the prevalence of store credit for consumption smoothing and market access in developing countries. We suggest that customers in these settings have an unmet demand for credit but struggle to demonstrate creditworthiness, leading stores to under-experiment with lending. These findings indicate potential for increased credit access by subsidizing business experiments and reducing lending default risks.
The long-run effects of targeting schooling investments at historically disadvantaged groups with Naveen Kumar
Draft available upon request | Supported by The Stone Program at Harvard and Mittal SAI
We use admissions lotteries to estimate the long-run effects of a residential middle school system targeted at historically disadvantaged communities in India. The school system boosts years of schooling, test scores, college attendance, senior secondary school graduation, and labor force participation. However, we also find that treated students have substantially smaller and mroe caste-homogenous networks. While treated students have better observable employability, their labor market outcomes are weakly worse, likely due to slower job arrival rates as a consequence of more homogenous networks. Our findings illustrate the impacts of delivering high-quality educational infrastructure at historically disadvantaged groups, while also highlighting the importance of measuring long-term and non-test score outcomes in evaluating the effectiveness of education programs.
Targeting social welfare programs to construction workers with Sabareesh Ramachandran
Supported by the Department of Labour, Government of Odisha
Long-run effects of targeting schooling investments at historically disadvantaged groups
Draft available upon request
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