Many workers in the developing world are employed in small, relatively unproductive firms, limiting employment growth and constraining workers’ ability to rise out of poverty. Recent empirical work highlights labor market frictions as a barrier to firm growth: when faced with frictions that make it difficult to determine a job-seeker’s ability or skills, firms may adopt inefficient hiring strategies, such as leaving positions vacant, or retaining unproductive workers. These outcomes are not only costly for firms but also for workers who will face higher rates of unemployment.
Demonstrating the Approach
The purpose of this research is to determine how online job portals help SME’s in India identify the most suitable workers, thereby stimulating firm growth and reducing unemployment. To this end, we have designed a randomized control trial (RCT) that will test the impact of two specific interventions: a promotional campaign to advertise individual job posts, and screening via skills assessments administered to job applicants. We will be working closely with Babajob, India’s largest job portal for the informal sector, and Aspiring Minds, the largest skills test provider in the country, to adapt existing assessment content and integrate it to the Babajob platform, making these assessments available to firms and jobseekers in the informal or entry-level sector.
2016 – 2017 in Brief
This year we intend to roll out the RCT and conduct three waves of surveys. The RCT will involve randomly selecting firms among Babajob’s existing database and providing them with access to one of two services: a promotional campaign, which sends 200 SMS to job seekers alerting them of the job opportunity, and access to skills assessments, which invites all applicants to take a skills tests designed by Aspiring Minds, and displays their scores to firms. We will then administer three surveys to firms in order to capture information about firms regular operations, their hiring practices, and their response to the services we provide.