HOW DOES PUBLIC SPENDING IMPACT EMPLOYMENT OUTCOMES? Evidence from Indian public investment into the technical tertiary education sector

Employment outcomes, such as salaries/hourly wages, have been substandard among India's technical graduates, but the impact of regional education budgets on employment outcomes has historically been empirically understudied. Further, in comparison to Western economies, a thorough study of the impact and efficiency of the Indian education budget on economic

long-run effects has not been done in mainstream publications. This thesis aims to use data on state tertiary technical education spending to study the impact on salaries and work hours with cohort and state effects using different statistical methodologies, thereby bridging the knowledge gap. This specification will include both fixed effects regression models as well as a

continuous difference-in-difference model that has seldom been attempted in empirical studies. We also propose to conduct a heterogeneity analysis with different sub-populations relating to rural/urban settlements, religion, and caste to explore whether the budget allocations are equitable. This analysis will also

include a variable for affirmative action policies. Through preliminary regression analysis, we find that, while the lagged state budgets had positive effects on current employee work hours, they had negative effects on current salaries and hourly wages, and this negative effect was more pronounced for

rural populations and lower caste citizens. These results open up the possibilities for more in depth research using specific aspects of the budget; for instance whether funding into teaching or scholarships lead to better employment outcomes as opposed to funding into administration or infrastructure. This thesis also has important policy implications and has the

potential to shed light on the possible budget inefficiencies and unintended partisan distribution effects. The results of the thesis can convey important information on whether disadvantaged populations are benefited or if there is a crowding out effect (more privileged sub-populations crowding out admissions

and job opportunities in technical education) and/or creamy layer problem (i.e., the concern that affirmative action policies result in wealthy students within minority groups displacing poorer students in non-minority groups) that affirmative action policies are ignoring.