The Indian labour market through the lens of public sector recruitment

Azim Premji University,


In India, as in many countries around the world, most government jobs are allocated through a system of merit-based exams. Over the past few decades, these exams have become incredibly competitive, at times receiving over 1,000 applications for each vacancy.

Against a backdrop of rising educational attainment, high aspirations, disappointment with private sector opportunities, and a deep unmet need for income security, it is understandable why the demand for public sector employment opportunities is so high.

Yet despite the large footprint that public sector recruitments have in our social, economic and political life, many basic questions about them remain shrouded in mystery. Who applies? Why do they apply? Are these intense levels of competition socially productive, or do they make people worse off? Why are people willing to invest so much in exam preparation? Why are people willing to gamble on such low odds of getting selected?

Our lack of understanding limits our ability to formulate sound labour market policy. As we will see, a large share of college graduates participate in public sector recruitment exams, and candidates for these exams make up a disproportionate share of the overall unemployed population. How can we improve employment outcomes if we do not understand who the unemployed are and how they invest their time?

The main reason for the holes in our understanding is a lack of data. To date, neither private nor public household surveys include questions on whether individuals are preparing for competitive exams; and recruitment agencies have historically been cloistered institutions, understandably concerned about protecting the integrity of the recruitment process. As a result, the crores of candidates preparing for competitive ex- ams around the country remain largely invisible in data, and by extension in policy.

This report attempts to shine a light on this dark corner of the labour market. To do so, the researcher uses several new sources of data. First, he draws on administrative data from a recruitment agency. This data allows us to observe the whole recruitment process for the entire universe of applicants — the first time such data has been made available in the Indian context. 

Second, the researcher uses data from a large-scale survey of over 3,000 candidates, which provides information about their investments in exam preparation, their access to resources, their constraints, and their beliefs. 

Third, the research collaborators and the researcher conducted interviews and focus groups with candidates to better understand them in their own words. These rich data sources provide new insights into the economic and social life of candidates preparing for competitive exams.

The goal of this report is to demonstrate how both labour market and recruitment policy can be informed by a better understanding of candidate application behaviour. This un- derstanding can, in turn, help us tackle some of the key challenges in the modern Indian labour market — high levels of educated unemployment, a lack of skill development, low levels of female labour force participation, and more.