TACKLING YOUTH UNEMPLOYMENT: EVIDENCE FROM A LABOR MARKET EXPERIMENT IN UGANDA

We design a labor market experiment to compare demand-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 compare the effect of offering workers either vocational training (VT) or firm-provid...

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Veröffentlicht in:Econometrica 2020-11, Vol.88 (6), p.2369-2414
Hauptverfasser: Alfonsi, Livia, Bandiera, Oriana, Bassi, Vittorio, Burgess, Robin, Rasul, Imran, Sulaiman, Munshi, Vitali, Anna
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container_issue 6
container_start_page 2369
container_title Econometrica
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creator Alfonsi, Livia
Bandiera, Oriana
Bassi, Vittorio
Burgess, Robin
Rasul, Imran
Sulaiman, Munshi
Vitali, Anna
description We design a labor market experiment to compare demand-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 compare the effect of offering workers either vocational training (VT) or firm-provided training (FT) for six months in a common setting where youth unemployment is above 60%. Relative to control workers, we find that, averaged over three post-intervention years, FT and VT workers: (i) enjoy large and similar upticks in sector-specific skills, (ii) significantly improve their employment rates, and (iii) experience marked improvements in an index of labor market outcomes. These averages, however, mask differences in dynamics: FT gains materialize quickly but fade over time, while VT gains emerge slowly but are longlasting, leading VT worker employment and earning profiles to rise above those of FT workers. Estimating a job ladder model of worker search reveals the key reason for this: VT workers receive significantly higher rates of job offers when unemployed, thus hastening their movement back into work. This likely stems from the fact that the skills of VT workers are certified and therefore can be demonstrated to potential employers. Tackling youth unemployment by skilling youth using vocational training pre-labor market entry therefore appears to be more effective than incentivizing firms through wage subsidies to hire and train young labor market entrants.
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This likely stems from the fact that the skills of VT workers are certified and therefore can be demonstrated to potential employers. 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source Wiley Online Library Journals Frontfile Complete; JSTOR Mathematics & Statistics; Jstor Complete Legacy
subjects Economic theory
Employers
Employment
Experiments
human capital
Labor market
Market entry
Occupational training
on‐the‐job training
Statistics
Subsidies
Supply & demand
Teenagers
Training
Unemployed people
Unemployment
Vocational education
Vocational training
Workers
Youth
youth unemployment
title TACKLING YOUTH UNEMPLOYMENT: EVIDENCE FROM A LABOR MARKET EXPERIMENT IN UGANDA
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