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

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Employment outcomes, such as salaries/hourly wages, have beensubstandard among India's technical graduates, but the impact of regionaleducation budgets on employment outcomes has historically been empiricallyunderstudied. Further, in comparison to Western economies, a thorough studyof the impact and efficiency of the Indian education budget on economiclong-run effects has not been done in mainstream publications. This thesisaims to use data on state tertiary technical education spending to study theimpact on salaries and work hours with cohort and state effects using differentstatistical methodologies, thereby bridging the knowledge gap. Thisspecification will include both fixed effects regression models as well as acontinuous difference-in-difference model that has seldom been attempted inempirical studies. We also propose to conduct a heterogeneity analysis withdifferent sub-populations relating to rural/urban settlements, religion, and casteto explore whether the budget allocations are equitable. This analysis will alsoinclude a variable for affirmative action policies. Through preliminaryregression analysis, we find that, while the lagged state budgets had positiveeffects on current employee work hours, they had negative effects on currentsalaries and hourly wages, and this negative effect was more pronounced forrural populations and lower caste citizens. These results open up thepossibilities for more in depth research using specific aspects of the budget; forinstance whether funding into teaching or scholarships lead to betteremployment outcomes as opposed to funding into administration orinfrastructure. This thesis also has important policy implications and has thepotential to shed light on the possible budget inefficiencies and unintendedpartisan distribution effects. The results of the thesis can convey importantinformation on whether disadvantaged populations are benefited or if there is acrowding out effect (more privileged sub-populations crowding out admissionsand job opportunities in technical education) and/or creamy layer problem (i.e.,the concern that affirmative action policies result in wealthy students withinminority groups displacing poorer students in non-minority groups) thataffirmative action policies are ignoring.