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Addressing Youth Unemployment: New Evidence From Field Experiments

Paper Session

Saturday, Jan. 6, 2018 8:00 AM - 10:00 AM

Pennsylvania Convention Center, 109-A
Hosted By: American Economic Association
  • Chair: Owen Ozier, World Bank

A Firm of One’s Own: Experimental Evidence on Credit Constraints and Occupational Choice

Andrew Brudevold-Newman
,
University of Maryland
Maddalena Honorati
,
World Bank
Pamela Jakiela
,
University of Maryland
Owen Ozier
,
World Bank

Abstract

We conducted a randomized evaluation of two labor market interventions targeted to young women aged 18 to 19 in three of Nairobi’s poorest neighborhoods. One treatment offered participants a bundled intervention designed to simultaneously relieve credit and human capital constraints; a second treatment provided women with an unrestricted cash grant, but no training or other support. Both interventions had economically large and statistically significant impacts on income over the medium-term (7 to 10 months after the end of the interventions), but these impacts dissipated in the second year after treatment. Our results are consistent with a model in which savings constraints prevent women from smoothing consumption after receiving large transfers — even in the absence of credit constraints, and when participants have no intention of remaining in entrepreneurship. We also show that participants hold remarkably accurate beliefs about the impacts of the treatments on occupational choice.

Assessing the Potential of Vocational Training and Small Business Grants in Kenya

Joan Hamory Hicks
,
University of California-Berkeley
Michael Kremer
,
Harvard University
Isaac Mbiti
,
University of Virginia
Edward Miguel
,
University of California-Berkeley

Abstract

We study the medium term impacts of a youth training and small business grant intervention among young adults in Kenya. Program participants were randomly allocated into four different groups. Group 1 received tuition vouchers usable in public and private vocational training institutions throughout the country, and were later offered cash grants to support the creation or expansion of small businesses. Group 2 participants received vouchers only, while Group 3 individuals received cash only. Group 4 served as a comparison. Participants were interviewed in multiple rounds of data collection during and after the program. We explore labor market and other important life outcomes of the training and cash grant interventions both separately and in combination with each other, and consider differences by gender.

Adolescent Girls Empowerment in Conflict-affected Settings: Experimental Evidence From South Sudan

Niklas Buehren
,
World Bank
Shubha Chakravarty
,
World Bank
Markus Goldstein
,
World Bank

Abstract

We study the impact of a program designed to accelerate the economic and social empowerment of adolescent girls in South Sudan by simultaneously engaging them in vocational and life skills training through youth clubs. We build our evidence on a cluster-randomized study design and follow-up data that was collected about one year after the program ended. The time leading up to the follow-up survey was marked by conflict that erupted in December 2013 and affected around half of the adolescents or their immediate families in our sample. Taking conflict into account as a mediator for the program’s effectiveness, we find that the intervention had positive impacts on a range of labor market and financial outcomes. The program increased the probability of being engaged in income generation for adolescents in treatment areas by almost 10 percentage points which was largely driven by non-farm self-employment. The program also significantly increased the likelihood that girls reported to have any savings and to control some money on their own. The impact of the program on girls’ social empowerment and their control over their own bodies is more ambiguous.

Demand- and Supply-side Policies to Tackle Youth Unemployment: Evidence From a Labor Market Experiment in Uganda

Oriana Bandiera
,
London School of Economics
Vittorio Bassi
,
University College London
Robin Burgess
,
London School of Economics
Imran Rasul
,
University College London
Munshi Sulaiman
,
BRAC International

Abstract

We design a labor market experiment to compare demand-side and supply-side policies to tackle youth unemployment, a key issue in low-income countries. The experiment tracks 1700 workers and 1500 firms over four years to contrast the effects of offering workers vocational training (VT) to offering firms wage subsidies to train workers on-the-job (FT). Both treatments lead to skill accumulation but whilst VT workers learn sector-specific skills, FT workers learn more firm-specific skills. This is associated with higher employment rates for each type of worker but the effect is 50% larger for VT (21% vs 14%) and their total earnings increase by more (34% vs 20%). Structurally estimating a job ladder model reveals the mechanisms: VT workers receive higher rates of unemployment-to-job offers and higher rates of job-to-job offers. This greater labor market mobility stems from the certifiability and transferability of their skills, and causes the wage profiles of VT workers to diverge away from FT workers. Evidence from the firm-side of the experiment complements these findings: we find that some of the higher returns to VT are driven by workers matching to higher productivity firms. Our evidence shows both firms and workers are constrained in this setting and that subsidies to either side of the labor market would increase workers' employment and earnings. However, VT workers are better off than FT workers as the greater certifiability and transferability of their skills allows them to climb the job ladder more quickly.
Discussant(s)
Corinne Low
,
University of Pennsylvania
Paul Gertler
,
University of California-Berkeley
Sarah Baird
,
George Washington University
David McKenzie
,
World Bank
JEL Classifications
  • O1 - Economic Development
  • J2 - Demand and Supply of Labor