Preferences or possibility? Understanding the labour supply decision in an LIC context

The number of high-skilled workers in developing countries has been on the rise in recent years as spending on tertiary education expands, yet labour markets have not been able to create jobs to keep up with new skilled workers entering the labour market. The result has been a combination of underemployment and unemployment. Despite this pressing issue, we are not fully able to explain the labour supply of skilled workers in developing countries. Much of the economics literature has tended to focus on questions related to the aggregate supply of and demand for high-skilled labour and on overall wage determination in this sector. In contrast, research on the underlying drivers of the labour supply decisions of high-skilled individuals in these environments is relatively scarce.

This project is concerned with deepening our understanding on how the interplay between preferences of individual job-seekers, their specific characteristics (such as their education or measured skills), their beliefs about the characteristics of jobs, and the process of finding employment determines eventual occupational outcomes. Preferences, in this context, entails characteristics such as intrinsic financial and prosocial motivations, attitudes toward risk and uncertainty, and desires for social status.Though the focus will be on one segment of the Sierra Leonean labour market, the research aims to contribute to the broader study of labour markets in developing countries by adding to the body of experimental evidence on individual decision-making in labour markets. Through this, the objective is to generate insights that may help guide policies for skilled labour in developing countries as it relates to incentivising skilled

Though the focus will be on one segment of the Sierra Leonean labour market, the research aims to contribute to the broader study of labour markets in developing countries by adding to the body of experimental evidence on individual decision-making in labour markets. Through this, the objective is to generate insights that may help guide policies for skilled labour in developing countries as it relates to incentivising skilled workers, and minimising barriers to search and matching in the labour market.

In order to explore these ideas, this project will combine survey and interview techniques with experimental methods from behavioural economics to study occupational choice and job sorting of university graduates. This will be combined with employer interviews on the demand side. Fieldwork for the project will take place in Freetown, Sierra Leone, between August to December 2017.