Implications of Public Sector Hiring Structures on Private Sector Labor Markets

Public sector jobs are highly sought after in developing countries, with candidates spending years unemployed to compete for them. In India, less than one percent of candidates who compete end up successful, which raises questions about the long-term labor market outcomes of those who don’t make the cut. Using a correspondence study with private sector employers on India’s biggest job platform, this study investigates whether exam preparation has costs in terms of private sector job opportunities for unsuccessful candidates. Findings from this study will highlight the differences in interview callbacks for candidates with a history of preparing for government exams, relative to candidates who have remained in the private sector since graduation. The study will also highlight if the scores in the government exam hold any signal value in the private sector, to inform policy recommendations on making the time spent on exam preparation useful outside of public sector recruitment drives.