Local Labor Markets and Child Learning Outcomes in India

This paper uses data from rural India to study the relationship between local labor market opportunities and child education outcomes. We construct a Bartik index as a measure of exogenous changes in district-level labor demand and find that an increase in predicted overall employment growth is associated with higher years of education and better test scores for both boys and girls of primary school age. The effects on test scores of older boys are smaller and less statistically significant. Older girls, however, do benefit from better labor market opportunities. We do not find evidence for changes in school quality or district-level investment. Instead, we find support for increases in household education spending, possibly because of overall higher wages, or re-allocation of resources.