The Grass is Not Always Greener: The Effects of Local Labour Market Information on Search and Employment

We examine how the provision of local labour market information shapes search and employment for job seekers in India. We randomly assign a group of job seekers to receive truthful information about the number and attributes of either job postings, applicants, or both for their preferred city and occupation on an online job portal. Treated respondents receiving any local labour market information are 10.2% more likely to be employed than control respondents seven months later. This overall effect varies considerably by baseline employment status and labour market beliefs. Among the initially employed, treated respondents are less likely to search off the portal, but are more likely to be employed because they remain in their (baseline) jobs. In contrast, among the initially unemployed, treated respondents are more likely to search across all methods, but only those with less optimistic labour market beliefs accept offers and are more likely to be employed. Our results are consistent with respondents inferring poor job prospects from the information treatments and show how access to local labour market information can reduce frictional unemployment.

Written with A. Nilesh Fernando (University of Notre Dame)