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. The purpose of this project 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 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 are 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 assessments available to firms and jobseekers in the informal or entry-level sector. Results forthcoming.
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