Labor rationing
This journal article, published by the American Economic Review, examines labour market rationing in India by measuring excess labour supply through large scale hiring shocks; how labour shortages and seasonal demand affect wages, employment, and self-employment; and how traditional surveys underestimate labour market slack. See the abstract below for details.
This paper measures excess labor supply in equilibrium. We induce hiring shocks—which employ 24 percent of the labor force in external month-long jobs—in Indian local labor markets. In peak months, wages increase instantaneously and local aggregate employment declines. In lean months, consistent with severe labor rationing, wages and aggregate employment are unchanged, with positive employment spillovers on remaining workers, indicating that over a quarter of labor supply is rationed. At least 24 percent of lean self-employment among casual workers occurs because they cannot find jobs. Consequently, traditional survey approaches mismeasure labor market slack. Rationing has broad implications for labor market analysis.