Subjective Earnings and Employment Expectation Updating
RCTClinical Trial
Underinvestment in female human capital often stems from severe underestimation of future earning potential and formal sector job availability by rural parents and youth. When subjective expectations are anchored on low historical local returns, households underinvest in daughters even when high-paying urban opportunities exist.
Picture this
Imagine villagers who believe that catching a valuable golden fish in the ocean is a one-in-a-million impossibility, so nobody buys fishing nets. When recruiters visit and demonstrate that one out of every twenty trained villagers actually catches a golden fish and earns high wages, everyone instantly updates their mental odds and starts buying fishing gear.
What the evidence says
Recruitment services significantly increased the reported expected probability that a girl with a secondary education would obtain a well-paying service job, alongside a statistically significant increase in expected monthly earnings for educated young women.
- Who was studied
- 3,211 households and 1,361 young women aged 15–21 across 160 rural Indian villages.
- How
- Longitudinal randomized evaluation eliciting subjective probabilities of obtaining formal employment and expected monthly earnings at baseline and three-year follow-up.
What to do
Incorporate transparent wage and job placement statistics into career counseling interventions to align subjective household expectations with actual labor market returns.
From the source
"The recruitment services increased the reported expected probability that a girl who completes secondary school would get a BPO or white-collar job, as well as expected earnings for educated women."
517 labor market opportunities QJE April '12.pdf