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We analyze state-level matching efficiencies in the Indian labor market using stochastic frontier analysis. The key contribution of this research is the estimation of matching efficiencies at the state level because these can be used for a state-level measure of labor market conditions. Next, we explore the relationship between the estimated matching efficiencies and population density, labor market flexibility, and the Ease of Doing Business index, respectively. The results show that matching efficiency is heterogeneous across states with considerable variation in accordance with the regional diversity in India. However, we find that there is little relationship between the estimated matching efficiencies and the labor market conditions of interest, suggesting that other regional diversity affects matching efficiencies across states in India.

Using the 61st and 68th rounds of National Sample Survey data, we investigate the role of stigma, the economy's structure, potential selection bias, and sectoral differences in explaining the low labor force participation (LFP) of middle and secondary educated women in India relative to low‐ and high‐educated women (the "U‐shape"). Estimating LFP regressions on a sample of prime‐aged married women, we show that, controlling for background characteristics, if a woman's husband works in a white‐collar job in a region with a high share of blue‐collar jobs, she is less likely to participate in the labor market (stigma). We also find a positive effect of an increase in an index of white‐collar job growth (structure) on married women's LFP. These effects are present in both rural and urban sectors but are strongest in the rural sector. However, middle and secondary educated women are still found to have substantially lower LFP than low‐ and graduate‐educated women in both sectors. Indeed, over time, the U‐shape persists in the rural sector and deepens in the urban sector. Because unobservables are quite large in the urban sector, we use the method of instrumental variables and find an increasing return at middle levels but stagnation at higher levels. [ABSTRACT FROM AUTHOR]

Using state-level panel data in India from 1999 to 2011, I estimate the matching functions to investigate the effect of labor market flexibility on new job matches. Next, I categorize the regions by the labor market flexibility and estimate the matching functions in the respective regions. This is the first original work that uses state-level data to estimate the matching function in India. The results show that there is no direct link between labor market flexibility and new hires, and this implies that overall effect of stringent employment protection legislation on efficiency of the job matching process is limited. However, the findings are consistent with the prediction of the search-matching model. The evidence shows that in a region with inflexible labor market, the job matching process is entirely vacancy-driven, implying a lack of labor demand. For such regions, it is recommended that policies aimed at boosting labor demand, such as employment subsidies, are appropriate for creating more employment. [ABSTRACT FROM AUTHOR]