How Important are Matching Frictions in the Labor Market? Experimental & Non-Experimental Evidence From a Large Indian Firm

This paper provides evidence of matching frictions in the Indian labor market. Using several methods to elicit genuine preferences of job-seekers over jobs, we show that: (a) there is substantial variation in job-seekers’ preferences over the same jobs and (b) placement officers, responsible for placing job-seekers in jobs, have poor knowledge of it. Providing placement offers with this information improves matching of job-seekers to interviews, even after taking into account redistribution of jobs across job-seekers. Treated job-seekers get more preferred jobs and retain them in the short run (three months), but not in the longer run (six months)