The Impact of Employment Quotas on the Economic Lives of Disadvantaged Minorities in India

Using nationally representative household data from India, I estimate the effects of the world’s biggest and arguably most aggressive employment-based affirmative action policy for minorities on their labor market and children’s outcomes. In India, public sector jobs are set aside for scheduled castes (SCs) and scheduled tribes (STs), the two principal disadvantaged minority groups in India. To identify the causal effect of these job reservations, I take advantage of the fact that the share of jobs set aside is based on a strict policy rule stipulated by the Indian Constitution. The policy rule requires that the shares of public sector jobs reserved for SCs and STs be the same as their shares of the total population in the most recent decennial census. This policy rule and the administrative lags in its implementation generate exogenous variation in share of jobs reserved for minorities. I find that job reservations benefit Scheduled Castes-increasing the share of jobs set aside for SCs significantly increases the probability of acquiring a salaried job, household consumption expenditure, and children’s school enrollment, and decreases incidence of child labor. These effects are more mixed for Scheduled Tribes; possibly the benefits are less for them because of the great mismatch between where STs tend to live and public sector jobs tend to be located. JEL classification: H40, J21, J31, J45, O10.