Labor Rationing: A Revealed Preference Approach from Hiring Shocks

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Yogita Shamdasani (National University of Singapore)
14 Jul 2020 (Tuesday)
11:30 am - 12:30 pm
Zoom

In developing countries, wage employment rates are often low, but whether this reflects high involuntary unemployment is unclear. Economists assess unemployment using survey self-reports, whose reliability is unknown. We develop an approach to obtain the first revealed preference estimates of labor rationing. We generate large transitory hiring shocks in Indian local labor markets — hiring up to 35% of the male labor force for month-long work in external job sites. We find a central role for seasonality. During peak employment seasons, the hiring shocks instantaneously increase local wages and crowd-out local aggregate employment, consistent with textbook predictions. In contrast, we find evidence for severe labor rationing during lean seasons, which account for 6 months of the year. Specifically, “removing” a large portion of workers leads to (i) no change in the local wage and (ii) no change in local aggregate employment levels — due to one-for-one positive employment spillovers on the remaining workers who benefit from decreased competition for job slots. Much of this rationing is disguised in the form of less productive self-employment. We document that traditional government surveys will substantively underestimate labor market slack in this context. Our approach can be extended to obtain revealed preference bounds on rationing in diverse settings.

The paper draft is avaiable on the speaker's webpage at https://sites.google.com/site/yogitashamdasani/research . 

About the speaker

Yogita Shamdasani is an Assistant Professor of Economics at the National University of Singapore. Prior to joining NUS, she was an Assistant Professor at the University of Pittsburgh. Yogita holds a PhD in Economics from Columbia University and a BA in Mathematics and Economics from Cornell University.

Yogita’s research interests are in the fields of development and labor economics. She uses field and natural experiments to study the causes and consequences of labor market frictions in developing countries, as well as to explore constraints to labor productivity. In recent work, she examines how transport infrastructure influences agricultural productivity and sectoral reallocation of workers under climate change.

This webinar is part of a series of Zoom events that explores issues in growth and development in India. The series' academic committee consists of Takashi Kurosaki (Hitotsubashi Institute for Advanced Study), Pushkar Maitra (Monash University and Sujata Visaria (Hong Kong University of Science and Technology) .    

To Attend the Event

The event will take place on 14 July 2020 Tuesday at 11:30 am HKT == 1:30 pm AEST == 12:30 pm JST. (See corresponding times for different times zones).

The event will be held online via Zoom. Please sign up here as part of our security measures, and the meeting details will be sent to you by email about one day in advance of the event.  Also see here for advice from the university's IT office on Zoom best practices for attendees.  

House Rules

  • We would like the webinar to be interactive. Please join with both audio and video whenever possible.
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  • The chat function will be on, but the speaker may not see your chat message. Please consider raising your hand (blue hand button) or unmuting yourself to ask a question.
  • This talk will be recorded for internal use only. 

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