Do obstacles to job search contribute to labour market exclusion in developing countries?
Research summary and methodology
We the effects of two different interventions that reduce search frictions for young workers. The first intervention is a transport subsidy. Job search in our study area requires regular trips to the centre of town and we calibrate the subsidy amount to cover the cost of this journey. Participants can collect the subsidy from an office located in the centre of the city, up to three times a week. The second intervention is a job application workshop. Participants are offered orientation on how to make effective job applications using CVs and cover letters, and on how to approach job interviews. Further, we certify their general skills using a mix of standardised personnel selection tests. We worked with a trusted education institute to implement this intervention.
Both interventions are specifically geared to help job seekers to find formal and stable work. We use the existing job search system, without trying to match firms and workers together directly. Our interventions are cheap: the marginal cost of offering the treatment to one individual is about US$19.80 for the transport intervention and US$18.20 for the workshop We evaluate these programs using a large sample of over 3,000 young people (ages 18 to 30) who were without permanent work at the beginning of the study. We randomly assigned some respondents to receive either of the interventions. We study their labour market outcomes about 6 months after the interventions ended.
We find large and highly significant impacts of both treatments on job quality (that is, job stability and job formality), and we find significant impacts on employment and earnings among workers who are most disadvantaged.
Eight months after the end of the programme, individuals invited to our job application workshop are nearly 60 percent more likely to have permanent employment and 31 percent more likely to be in formal employment (compared to individuals in the control group). This reduces by more than 20 percent the gap in permanent employment between youth and older workers. Those who are offered the transport subsidy are 32 percent more likely to be in formal employment.
We consider how the effects labour market interventions differ by characteristics of the job-seeker. We find positive effects on job quality are concentrated among groups who typically find it harder to obtain high-quality employment. We also split our sample by the predicted probability of endline employment. Among those with a low predicted probability of endline employment — that is, a subsample facing greatest facing the greatest risk of exclusion from the labour market — we find large and significant treatment effects on the probability of employment, the probability of formal and of permanent employment, and on total earnings.
Girum Abebe; Marcel Fafchamps; Paolo Falco; Simon Frankin
Voxeu post: http://voxeu.org/article/impact-job-search-support-evidence-ethiopia
IGC blogpost: https://www.theigc.org/blog/curse-of-anonymity-or-tyranny-of-distance-the-impacts-of-job-search-support-in-urban-ethiopia/
Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City: http://www.simonrquinn.com/research/EthiopiaJobsExperiment.pdf