HOW DOES PUBLIC SPENDING IMPACT EMPLOYMENT OUTCOMES? Evidence from Indian public investment into the technical tertiary education sector

Employment outcomes, such as salaries/hourly wages, have been
substandard among India's technical graduates, but the impact of regional
education budgets on employment outcomes has historically been empirically
understudied. Further, in comparison to Western economies, a thorough study
of the impact and efficiency of the Indian education budget on economic
long-run effects has not been done in mainstream publications. This thesis
aims to use data on state tertiary technical education spending to study the
impact on salaries and work hours with cohort and state effects using different
statistical methodologies, thereby bridging the knowledge gap. This
specification will include both fixed effects regression models as well as a
continuous difference-in-difference model that has seldom been attempted in
empirical studies. We also propose to conduct a heterogeneity analysis with
different sub-populations relating to rural/urban settlements, religion, and caste
to explore whether the budget allocations are equitable. This analysis will also
include a variable for affirmative action policies. Through preliminary
regression analysis, we find that, while the lagged state budgets had positive
effects on current employee work hours, they had negative effects on current
salaries and hourly wages, and this negative effect was more pronounced for
rural populations and lower caste citizens. These results open up the
possibilities for more in depth research using specific aspects of the budget; for
instance whether funding into teaching or scholarships lead to better
employment outcomes as opposed to funding into administration or
infrastructure. This thesis also has important policy implications and has the
potential to shed light on the possible budget inefficiencies and unintended
partisan distribution effects. The results of the thesis can convey important
information on whether disadvantaged populations are benefited or if there is a
crowding out effect (more privileged sub-populations crowding out admissions
and job opportunities in technical education) and/or creamy layer problem (i.e.,
the concern that affirmative action policies result in wealthy students within
minority groups displacing poorer students in non-minority groups) that
affirmative action policies are ignoring.