Three Essays on Labor Markets of South Asian Countries

Abstract

South Asia has been experiencing robust economic growth of about 6% over the last decade. However, it is also the home to about 44% of the world's poor. About 571 million people of the region live under $1.25 a day. About 80% of its labor force works in the informal sector with low skill and low earnings. It has the largest working age population (56%) and the lowest female labor force participation (18%). It is also the largest sender of emigrants to the world. In order to promote sustainable and inclusive growth, South Asia needs to find productive employment for its key assets, which are its people. The governments of South Asian countries have taken many initiatives in this regard including education programs like the female secondary school stipend program, employment programs like the food for work and the employment generation for the poor and demand side interventions like enhancing firm's access to electricity through subsidy. This dissertation looks into the labor market effects of two such programs and whether international migration is an economically advantageous

outside option for the emigrants from South Asia. The first chapter studies the long-term effects of Bangladesh's female secondary school stipend program on both educational outcomes and economic empowerment of women and finds that the program can be associated with an increase in education level completed by at least 0.21 years, labor force participation by 2 percentage points and with an increase in the likelihood of women working in the formal sector by 3 percentage points. Female wages also increased, reflecting increased productivity. The second chapter finds that migrants from Bangladesh go to the country where they earn the most and the relative stock of more-educated Bangladeshi migrants is higher in the destination where the earnings difference between the skilled and the unskilled workers is higher. The third chapter builds a three sector model of the Indian labor market, calibrates it using pre-MNREGA data and finds that providing manual employment for a fixed number of days like the MNREGA in India can improve welfare for the unskilled but may have adverse effect on the formal sector and skilled workers.