Research

Working Papers

Evolving Occupations or Occupation-status? Employment Polarization in the Context of Developing Countries (with Arka Roy Chaudhuri and Tridip Ray)

Abstract: This paper investigates the phenomenon of job polarization in the context of developing countries. Our study provides a novel approach for studying employment polarization by considering organizational factors specific to labour markets in developing economies. We do not find evidence of job polarization but record occupation-status polarization in India and Indonesia where status refers to the type of employment contract. Using endogenous clustering, we show that worker statuses are likely to have different skills even within the same occupation. We posit that occupation-status should be the primary unit of analysis when studying job polarization in developing countries.

Do Clouds have a Silicon Lining for Firms? Contract Hiring and Computer Investment: Evidence from Rainfall Shocks (with Arka Roy Chaudhuri and Tridip Ray)

Abstract: Using Indian firm-level data from 2000 to 2010, we analyze how firms change hiring decisions due to change in computer capital, in the face of exogenous demand shocks, arising from district-level rainfall shocks. We find firms with greater than average share of computer capital, is associated with a decline in hiring or firing by 2.32 contract workers, when exposed to demand shocks. Our results are robust to a wide range of alternative measures such as computer capital share in expenditure, US based measures, among others. We also find that the results are driven by contract workers involved in the main production process (and not for workers carrying out peripheral activities). We conclude that firms investing relatively more in computer capital reduce the number of contract workers hired when exposed to positive demand shocks, suggesting labour-saving impact of technology at play.

The Heat is on: Temperature and Test Scores in India

Abstract: This study investigates the impact of temperature on exam scores. Studies have shown that heat has a negative impact on human cognition and physiology, leading to an adverse effect on economic outcomes such as health, labour productivity and human capital formation. I look at how exam-time temperature affects exam scores from a unique dataset from the Central Board of Secondary Education (CBSE) in India. I find that a one standard deviation increase in temperature leads to a decrease in exam scores by 0.016 standard deviations for the period 2012-2015. As a potential mechanism, I show that the impact on scores is through a physiological channel by comparing the effect on scores between genders. In line with the literature, I find that, compared to females, male students perform relatively worse during exams due to heat, possibly due to physical stress. I also find evidence that adaptation to heat can partially mitigate the effect of temperature on exam scores.

Labour Market Effects of R&D Tax: Evidence from a Quasi-natural Experiment (with Pavel Chakraborty and Rubina Verma)

Abstract: This study investigates the relationship between employment and Research and Development (R&D) investment. We exploit an R&D tax credit scheme on Indian manufacturing undertaken by the Government of India for the period 2001-2010. The scheme offered a tax weighted deduction of 150% for any capital and revenue expenditure incurred by firms on in-house R&D in eight industries (drugs and pharmaceuticals, electronic equipment, computers, telecommunications equipment, chemicals, manufacture of aircraft and helicopters, automobiles, and auto parts). We leverage the variation of eligibility for the scheme across firms in different manufacturing industries, and adopt a simple difference-in-difference framework to estimate the impact of R&D investment on employment. Preliminary results imply that on the intensive margin, the demand for managerial workers increased but there was a decline in demand for non-managerial workers. On the extensive margin, we do not find any impact on employment of managerial or non-managerial workers due to the credit scheme.