Youth Unemployment in India: Do Aspirations Matter?

An often discussed but less researched dimension of youth unemployment is voluntary unemployment caused by the mismatch between available opportunities in the labour market and employment aspirations. In this paper, we attempt to explore this misalignment between employment aspirations and the jobs in the labour market as a factor responsible for higher incidence of unemployment among youth. We build a measure of relative occupational aspirations based on the premise that aspirations are shaped by the socio-economic context and educational attainment of an individual. Our analysis provides evidence for a lack of employment opportunities that satisfy the employment aspirations of the youth. The mismatch between aspirations and opportunities measured as relative occupational aspirations gap, is particularly high among youth with tertiary education, and female youth have higher aspirations gap compared to males. Based on our analysis, which includes both multinomial probit and instrument variable (IV) probit models, we find that youth with higher aspirations gap are more likely to be unemployed. We argue that increasing educational levels raise job-related expectations and aspirations. The lack of quality employment opportunities matching the aspirations could be a contributing factor to higher unemployment among youth. An effective policy approach requires the creation of better-quality jobs that align with the aspirations of young, educated labour force.