Impacts of Public Sector Recruitment on Private Sector Labor Markets

Policy Context

Public-sector recruitment in India is organized through highly competitive, winner-takes-all exams. Lucrative government jobs offer wage premia and social prestige, but they also generate long queues: large numbers of young graduates devote multiple years to full-time preparation despite negligible selection probabilities. The social cost associated with this queuing is potentially large: time spent queuing can translate into foregone private-sector earnings, slower skill accumulation, and delayed career progression. Despite the centrality of public recruitment in shaping early-career decisions, there is limited direct evidence on how private employers interpret exam preparation spells relative to private work experience, and therefore limited ability to quantify the earnings-based social costs of queuing.

This project estimates the penalty (or premium) arising due to government exam preparation in private sector employment. These estimates will be used to calibrate a model that quantifies the social welfare loss, measured as the foregone private-sector earnings associated with prolonged queuing.

Study Design

The study is an experimental survey among recruiters in a large staffing firm, which employs over 100 recruiters across India. In face-to-face interviews, recruiters evaluate realistic resumes against job descriptions on a range of outcomes. Resumes are experimentally varied to isolate the labor-market consequences of government exam preparation versus private-sector experience, holding other profile characteristics constant through randomized resume construction.

This design (adapted from the Incentivized Resume Rating method) elicits a full set of recruiter assessments for every resume shown: overall suitability for the role, skills match, expected retention/fit, and compensation expectations conditional on hiring. Data from the survey will capture multidimensional evaluations that will paint a comprehensive picture of how private sector employers evaluate the growing cohort of government job aspirants. The survey was launched in December 2026 and data collection is now complete.

Results and Policy Lessons

Results forthcoming.