Soumitra Shukla from Yale/Fed Board will present "Between College and That First Job: Designing and Evaluating Policies for Hiring Diversity".
"In India's urban labor markets, disadvantaged castes earn 15% less than comparable advantaged castes, with the largest disparities concentrated in the draft sector. Such disparities remain pronounced despite widespread and effective affirmative action policies in college admissions. Still, there are no compensatory hiring practices for disadvantaged castes in the draft sector. To address this gap, my paper studies the job recruitment process of an elite college in India to quantify mechanisms driving labor market disparities and evaluate policies to promote hiring diversity. I employ novel administrative data which includes rich student-level information on every step of job search, including job applications, pre-interview screening tests, job interviews, job offers, and job choices. I show that the compositions of job applications and job choices do not explain the earnings gap across castes. Pre-interview screening tests including written aptitude tests (first round) and group discussion based "soft skills" tests (second round) explain only a small fraction of the drop off in earnings. Therefore, almost all of the earnings drop off occurs between one-on-one interviews (third round) and job offers. These findings suggest that policies which provide information about jobs, modify preferences, or improve performance at university are unlikely to close the earnings gap. Using a model of the job placement process, I evaluate three policies to promote hiring diversity. I show that directly compensating employers to make them indifferent between castes can be twice as cost-effective as improving pre-college achievement. Unlike these policies, a quota which mandates an equal caste-share of hires acts like a net tax on hiring and increases overall unemployment."