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The Slumdog Millionaire effect: Indian call centres promote local school enrolment

The & lsquo;Slumdog Millionaire’ effect: Indian call centres promote local school enrolment

Research shows evidence of globalisation’s impact on job opportunities and a return to education in the developing world

New research on school enrolment in India shows that call centres, typically outsourced by Western firms, have a positive impact on the number of students enrolling at local schools.

The study, by Emily Oster, Associate Professor of Economics at the University of Chicago Booth School of Business and Bryce Millett of Harvard University, found that introducing a new call centre causes a 4% to 7% increase in the number of children enrolling in primary school. The findings also show that enrolment in English-language schools increases by about 15% with the introduction of a new call centre.

The paper, Do Call Centres Promote School Enrolment? Evidence from India, asserts that these effects are concentrated in the immediate areas around the call centre and argues that the introduction of the call centre causes an increase in school enrolment, rather than this increase being driven by changes in population or income which accompany the centre. 

Using government data (DISE) on enrolment at 239,000 schools between 2001 and 2008 in three Indian states - Karnataka, Andhra Pradesh and Tamil Nadu - the data were combined with the locations and opening dates of 401 call centres.

“Our research evaluates the impact of these jobs on local school enrolment in areas outside of major IT centres,” said Emily Oster. “We show the effect, localized to within a few kilometres, is driven by English-language schools, consistent with the claim that the impacts are due to changes in returns to schooling, and is not driven by changes in population or income resulting from the call centre’s implantation.”

The data indicate that people travel several kilometres to work, which suggests that the narrow geographic range of call centre impacts is not due to localization of labour markets. In contrast, people’s knowledge of the centres is very localized. “Even limiting the sample to individuals who live within one kilometre of a centre,” said Bryce Millett, “we found that those who live closer are more likely to report they know of a centre in the local area and to correctly identify what qualifications are required for the job.”

“These results point to a causal impact of call centres on school enrolment and suggest that introducing a call centre with 80 employees increases enrolment in the local post code by 280 children,” said Bryce Millett.

The number of individuals employed in outsourcing-related businesses in India has increased from roughly 50,000 in 1991 to over 2 million in 2010 (NASSCOM, 2010). These jobs demand employees with high levels of education and a good command of English, and pay high salaries by Indian standards.

Understanding the magnitude of this change, and how widespread the impacts are, is important for understanding the consequences of globalisation.

“Globalisation has changed job opportunities in much of the developing world. In India, outsourcing has created a new class of high-skill jobs which have increased overall returns to schooling,” said Oster.

“Although this paper focuses on the case of India, the results may well have implications for other countries. In the broadest sense, they suggest that poor understanding of job opportunities is a potentially important factor in limiting school enrolment in the developing world.”

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