Article

Generating Employment in Poor and Fragile States: Evidence for Labor Market and Entrepreneurship Programs

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Abstract

The world's poor -- and programs to raise their incomes -- are increasingly concentrated in fragile states. We review the evidence on what interventions work, and whether stimulating employment promotes social stability. Skills training and microfinance have shown little impact on poverty or stability, especially relative to program cost. In contrast, injections of capital -- cash, capital goods, or livestock -- seem to stimulate self-employment and raise long term earning potential, often when partnered with low-cost complementary interventions. Such capital-centric programs, alongside cash-for-work, may be the most effective tools for putting people to work and boosting incomes in poor and fragile states. We argue that policymakers should shift the balance of programs in this direction. If targeted to the highest risk men, we should expect such programs to reduce crime and other materially-motivated violence modestly. Policymakers, however, should not expect dramatic effects of employment on crime and violence, in part because some forms of violence do not respond to incomes or employment. Finally, this review finds that more investigation is needed in several areas. First, are skills training and other interventions cost-effective complements to capital injections? Second, what non-employment strategies reduce crime and violence among the highest risk men, and are they complementary to employment programs? Third, policymakers can reduce the high failure rate of employment programs by using small-scale pilots before launching large programs; investing in labor market panel data; and investing in multi-country studies to test and fine tune the most promising interventions.

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... Evidence from India shows that the presence of women in political leadership positions significantly improves the extent to which women constituents' needs are represented, as well as young women's career aspirations, time spent on household chores, and human capital investments (Chattopadhay and Duflo, 2004;Beaman et al., 2012). Another potential channel through which young women's employment can indirectly promote development is by lowering fertility (Bloom et al., 2009). Africa has not yet completed its demographic transition, a phenomenon where declining mortality and fertility shift the population structure of a country or region. ...
... Though limited evidence is available on which kinds of violence can be addressed by income-oriented programs, some information is available on which programs are most effective at changing attitudes towards violence and reducing time spent on illicit activities. Skills development and microfinance programs have generally been ineffective on their own (Blattman and Ralston, 2015), though one study suggests that agricultural skills programs may be more effective at changing incentives in fragile agrarian states (Blattman and Annan, 2015). However, when combined with the promise of future capital (suggesting the importance of periodic payments) conditional on the male beneficiary's location, training programs shift hours away from illicit activities. ...
... International evidence points to the close relationship between childbearing and labor force participation of women. Panel data from 97 countries indicates that a birth is associated with a two-year reduction in a woman's labor supply (Bloom et al., 2009). Limited labor market opportunities may reduce the opportunity cost of marriage and childbearing, altering family formation decisions. ...
... Vocational training programs were the most common ALMP used by governments following the global financial crisis of 2007-08 (McKenzie and Robalino 2010). Blattman and Ralston (2015) note that the World Bank and its client governments invested nearly U.S. $1 billion per year between 2002 and 2012 on skills training programs. The premise of such programs is that a lack of certain technical skills is the reason that particular individuals are unemployed, and that these skills can be taught and learned in a relatively short period of time. ...
... Some studies that have measured impacts over multiple time periods beyond a year after training (Alz ua, Cruces, and Lopez 2016; Hirshleifer et al. 2016;Acevedo et al. 2017) have tended to find impacts fall over time, making the assumption that short-term gains will necessarily persist, although others have found sustained impacts on formal employment for certain subgroups (Ibarrar an et al. 2015;Attanasio, Medina, and Meghir 2017). 4 Further adding the need to discount the future at some rate, it is easy to arrive at the conclusion of Blattman and Ralston (2015), who state that "it is hard to find a skills training program that passes a simple cost-benefit test". ...
... The second approach has been to investigate whether the returns to training might be different for some subgroups of the population or training types, to argue that targeted training might work. Foremost among this has been a focus on gender, and there appears to be a stylized fact in the literature that vocational training has higher returns for women (e.g., Blattman and Ralston 2015). This appears to stem largely from the work in Colombia by Attanasio, Kugler, and Meghir (2011) and Attanasio, Medina, and Meghir (2017), who find significant impacts on employment for women but not for men. ...
... Interventions to increase human capital are common in low-income countries and have received widespread financial support in recent years-the World Bank alone invests up to one billion dollars per year in training programs (Blattman and Ralston, 2015). The standard training focuses on 'hard' skills such as financial literacy, book-keeping, marketing and sales (Bulte et al., 2016). ...
... These interventions are more psychology-based and include efforts not only to improve the representation (appearance) and health of participants but also to build character skills such as self-control, sociability and a proactive mindset (Heckman and Kautz, 2013). While a large body of literature examines the impact of 'hard' skills human capital interventions (e.g., Ralston, 2015 andKluve et al., 2019), the evidence regarding the impact of trainings combining 'hard' and 'soft' skills is limited, especially for developing countries. ...
... Moreover, to the extent that subjects in the treatment group displaced 'other job-seekers' on the labour market, the social returns of the project are lower than the private returns for the treatment group. Blattman and Ralston (2015) review the evidence regarding technical and vocational training and conclude it is disappointing. 2 Across the board, labour market outcomes were small or absent, and dropout rates were high. McKenzie (2017a) reviews nine vocational study interventions and finds that only three had a significant impact on employment (with an average increase in employment of 2.3 percentage points) and two find a statistically significant impact on earnings. ...
Article
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We use a randomised field experiment to study short-term and medium-term impacts of a training intervention that aims to increase employability of Rwandan (underemployed) youths. The training includes networking and mentorship as well as modules on developing entrepreneurship, technical skills and soft social skills. We evaluate intended outcomes of the training on attitudes towards work, employability and labour market outcomes. We also consider unintended social impacts of the training. The outcomes of the intervention are modest. While on the short term the training positively impacted ‘work readiness’ and networking, we do not document significant effects on employment status or income. In the medium term, we do not find any significant effect. Non-compliance and attrition reduced statistical power of our analysis.
... For example, interventions in LMI countries tend to be more recent compared to the stock of programs from high-income countries, benefiting from lessons from the past. However, in environments characterized by fragility, conflict and violence, interventions focusing on training provision or supplying start-up capital are unlikely to be attractive to, or successful for, beneficiaries because of the high risk of the environment (Blattman and Ralston, 2015). ...
... These impacts can have social returns irrespectively of whether they result in employment or not. A program providing life skills training to young at-risk men in Liberia did not increase jobs or earnings but successfully reduced violent and criminal behavior (Blattman and Ralston, 2015). Emerging qualitative and quantitative evidence from comprehensive youth employment programs in Southern Iraq, Kosovo, Papua New Guinea and Tunisia show positive outcomes in terms of social behavior and community cohesion. ...
... In violence and conflict prone settings (there are examples from interventions in US inner cities as well as Liberia) behavioral skills training, focusing on self-control, noncriminal values, etc., helped reduce youth's vulnerability towards crime and violent behavior. They have no impact on employment or earnings, however (Blattman and Ralston, 2015). ...
... Despite their popularity, the evidence base for training programs, or in contrasting alternative training programs in the same context, is thin. The meta-analyses of Blattman and Ralston (2015), McKenzie (2017), and Card, Kluve, and Weber (2018) show relatively weak or short-lived impacts of training programs in low-income settings. We thus close our analysis by highlighting potential explanations for the impacts we document. ...
... We assess whether the level of the wage subsidy is reasonable using two anchors: (i) Table A.IV shows that during apprenticeships, if workers were paid, their mean wage 14 The cost per trainee breaks down as the cost to the VTI ($400), plus the worker's out-of-pocket costs during training, such as those for travel and accommodation ($70). The staggered incentive contract solved drop-out problems associated with training programs in low-income settings (Blattman and Ralston (2015)). There was no additional stipend paid to trainees during training, and no child care offered (recall that around 10% of our worker sample have at least one child). ...
... In meta-analyses of training interventions in low-income settings, Blattman and Ralston (2015) and McKenzie (2017) documented that most interventions have a very low IRR. Figure A.6 compares our ITT treatment impacts relative to the experimental studies discussed in McKenzie (2017), on employment and earnings outcomes. Our effect sizes are large relative to earlier studies, although the ranking across treatment types is in line with earlier work. ...
Article
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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 long-lasting, 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.
... For Brazil in particular, some studies have previously found positive impacts of TVET on labor market variables ( [Almeida et al., 2014], [Vasconcellos et al., 2010], [Assunção and Gonzaga, 2010], [Oliva, 2014], [Neri, 2010]). The gender heterogeneity we find on labor market outcomes has been pointed out in systematic reviews about technical and vocational education in developing countries [Blattman and Ralston, 2015] and other active labor market policies in general [Bergemann and Van den Berg, 2008, Card et al., 2010, Card et al., 2015, Caliendo and Kunn, 2015 To our knowledge, [Alzúa et al., 2013] describe the only intervention where gender differences point to another direction, documenting that the Argentinian program "entra21" in Córdoba had positive and significant impacts on formal employment and earnings of men approximately 2 years after course completion, but not for women. We find strong evidence of heterogeneous effects in other dimensions, especially on non-cognitive skills, which have received less attention by the literature on TVET programs. ...
... The heterogeneity we find on labor market outcomes has been pointed out in systematic reviews about technical and vocational education in developing countries [Blattman and Ralston, 2015]. We bring novel information of heterogeneous effects on non-cognitive skills that are arguably valued in the labor market. ...
Article
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This paper describes the results from an evaluation of a public policy that offers scholarships to current and former public high school students, so that they can attend technical and vocational education courses free of charge. We use a waiting list randomized controlled trial in four municipalities in a southern Brazilian State (Santa Catarina) to quantify the effects of the program on school progression, labor market outcomes and non-cognitive skills. Our intention-to-treat estimates reveal substantial gender heterogeneity two years after program completion. Women experienced large gains in labor market outcomes and non-cognitive skills. Employment rose by 21 percentage points (or approximately 33%) and the gains in earnings are of more than 50%. Also, women who received the offer scored 0.5 σ higher on the synthetic index of non-cognitive skills and 0.69 σ higher on an extraversion indicator. We find no effects on the male sub-sample. These findings corroborate the evidence on gender heterogeneity in the labor market effects of technical and vocational education programs. We also perform a series of exercises to explore potential channels through which these effects arise.
... Finally, our paper contributes to the literature studying the role of human capital and entrepreneurship training in microenterprise development Woodruff 2014, Blattman andRalston 2015). 5 Governments and nongovernmental organizations have increasingly focused on providing business training programs targeted to poor people as illustrated by the International Labor Organization's Start Up and Improve Your Business program, which has been offered to at least 4.5 million people in 100 countries (Blattman andRalston 2015, Campos et al. 2017). ...
... Finally, our paper contributes to the literature studying the role of human capital and entrepreneurship training in microenterprise development Woodruff 2014, Blattman andRalston 2015). 5 Governments and nongovernmental organizations have increasingly focused on providing business training programs targeted to poor people as illustrated by the International Labor Organization's Start Up and Improve Your Business program, which has been offered to at least 4.5 million people in 100 countries (Blattman andRalston 2015, Campos et al. 2017). A growing literature has studied the impact of such business training programs on startups, profits, and the growth of businesses (Karlan and Valdivia 2011, De Mel et al. 2014, Drexler et al. 2014, Giné and Mansuri 2014, Berge et al. 2015a, Campos et al. 2017). ...
Article
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Can television be used to teach and foster entrepreneurship among youth in developing countries? We report from a randomized control field experiment of an edutainment show on entrepreneurship broadcasted over almost three months on national television in Tanzania. The field experiment involved more than 2,000 secondary school students, where the treatment group was incentivized to watch the edutainment show. We find some suggestive evidence of the edutainment show making the viewers more interested in entrepreneurship and business, particularly among females. However, our main finding is a negative effect: the edutainment show discouraged investment in schooling without convincingly replacing it with some other valuable activity. Administrative data show a strong negative treatment effect on school performance, and long-term survey data show that fewer treated students continue schooling, but we do not find much evidence of the edutainment show causing an increase in business ownership. The fact that an edutainment show for entrepreneurship caused the students to invest less in education carries a general lesson to the field experimental literature by showing the importance of taking a broad view of possible implications of a field intervention. This paper was accepted by David Simchi-Levi, behavioral economics.
... Firms may be particularly reluctant to invest in training workers in fragile and conflict-affected states, where political and # We thank the Umbrella Facility for Gender Equality (UFGE) Trust Fund for supporting this work, Sami Sofan for his work supporting this project, and Mohamed Raouda for research assistance. economic uncertainty makes many types of investments additionally risky (Blattman and Ralston, 2015). This paper reports on a randomized experiment testing an internship program in the Republic of Yemen that was intended to help overcome these constraints and provide employment experience to educated youth. ...
... This paper contributes to a broader literature on the impacts of labor programs on employment in developing countries. Blattman and Ralston (2015) provide a recent review, and note that it has been hard to find skills training programs that pass a cost-benefit test. To our knowledge this is the first randomized experiment to examine the impact of just an internship program in a developing country, despite such programs being used by a number of governments. ...
... 1 Job training programs have the potential to provide skills to young people, especially those who are locked out of the mainstream education system. Yet traditional approaches such as the provision of training through public vocational institutions are often criticized for their inability to provide market-ready skills in a cost-effective manner (Johanson & Adams, 2004;Blattman & Ralston, 2015). 2 In contrast, apprenticeship training programs are considered to be promising avenues to deliver skills training to youth, although there is limited empirical evidence on their effectiveness. ...
... There is a larger literature that evaluates vocational training programs as well as business training programs in these contexts. Overall, these studies find that training programs are generally ineffective (Blattman & Ralston, 2015;McKenzie & Woodruff, 2013). We are aware of only two recent randomized control trials on apprenticeships in Africa. ...
... The emerging literature indicates that multifaceted interventions, such as providing financial resources and incentives to save, together with support services (training, mentorship), have the potential to alleviate deep poverty [29][30][31][32] and address multidimensional poverty among vulnerable adolescents [33]. However, to our knowledge, no research has taken a multidimensional approach to poverty among ALWHIV and examined the impact of a multifaceted economic empowerment (EE) intervention on addressing it among ALWHIV. ...
... Specifically, family EE interventions make noticeable and significant changes to multidimensional poverty among ALWHIV both in short-and long-term perspectives. Thus, our findings contribute to the evidence supporting family-based EE interventions in decreasing poverty even among the most vulnerable groups [29][30][31][32], specifically regarding its multidimensionality [33]. However, future research is needed to explore which specific intervention parts (savings account with savings match, mentorship, financial capability training) produced more potent effects. ...
Article
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Children growing up in poverty are disproportionately affected by diseases, including HIV. In this study, we use data from Suubi+Adherence, a longitudinal randomized control trial (2012–2018) with 702 adolescents living with HIV (ALWHIV), to examine the effectiveness of a family-based multifaceted economic empowerment (EE) intervention in addressing economic instability and multidimensional poverty among ALWHIV in Southern Uganda. We constructed a Multidimensional Poverty Index of individual and household indicators, including health, assets, housing and family dynamics. We computed the proportion of multidimensionally poor children (H), estimated poverty intensity (A) and adjusted headcount ratio (M0). Using repeated measures at five-time points (baseline, years 1, 2, 3 and 4-post baseline) across two study arms: treatment (receiving the EE intervention) vs. control arm (not receiving EE), we find that both the incidence and proportion of multidimensional poverty decreased in the treatment arm vs. the control arm. Given that there is a direct link between economic instability and poor health outcomes, these findings are informative. They point to the potential for family EE interventions to decrease multidimensional poverty among vulnerable children, including ALWHIV, impacting their overall wellbeing and ability to meet their treatment needs and improve HIV care continuum outcomes.
... Employment services can help women find and match with jobs. These interventions have mixed effectiveness but may be particularly effective for women facing a constrained labor market in Egypt (Blattman & Ralston, 2015;Card, Kluve, & Weber, 2018;Elsayed, Hempel, & Osman, 2018;Groh, McKenzie, Shammout, & Vishwanath, 2015). ...
... There is a sizeable global literature on active labor market policies (ALMPs) (Blattman & Ralston, 2015;Card, Kluve, & Weber, 2018;McKenzie, 2017), including employment services (job matching) interventions that work to overcome frictions in the labor market (Abdul Latif Jameel Poverty Action Lab (J-PAL), 2018). The results of job matching services to date are mixed. ...
... Skills training programs are a particularly common option among the range of different ALMPs. One study estimates that the World Bank and its client governments invested nearly U.S. $1 billion per year on 93 skills training programs between 2002 and 2012 (Blattman & Ralston, 2015). However, the popularity of skills training programs among governments and donors has been criticized recently. ...
... One reason is that literature reviews and meta-analytic studies often find that impacts from training programs are only modest on average (Card et al., 2018;. Consequently, some argue that many training programs would not pass a cost-benefit test based on private returns and thus question whether training programs are the best use of limited public funds (Blattman & Ralston, 2015;. ...
Thesis
Politische Entscheidungsträger sind zunehmend besorgt über die hohe und steigende Einkommens- und Vermögensungleichheit weltweit (Kanbur, 2019; Wood, 2018). Ein wesentlicher Faktor ist die ungleiche Verteilung von Bildung und produktiven Fähigkeiten innerhalb von Gesellschaften sowie zwischen Ländern (Martin, 2018; Stijn et al., 2019). Die Förderung von benachteiligten Bevölkerungsgruppen neue Kompetenzen zu erwerben ist daher ein wichtiger politischer Hebel zur Bekämpfung von Ungleichheiten (OECD, 2019). Diese Dissertation liefert neue Erkenntnisse darüber, wie Trainingsmaßnahmen gestaltet werden können, um das wirtschaftliche Wohlergehen von Teilnehmer effektiv zu verbessern. Auf der Grundlage kontrafaktischer Wirkungsevaluierungen wird in den vier Kapiteln die Effektivität von Trainingsmaßnahmen in drei zentralen Politikbereichen analysiert: berufliche Fähigkeiten, Unternehmertum und finanzielle Bildung. Die Ergebnisse zeigen, wie wichtig es ist, zielgerichtete und maßgeschneiderte Maßnahmen zu entwickeln, welche gleichzeitig auf verschiedene Bedürfnisse, Einschränkungen und Chancen von geringer-qualifizierten, benachteiligten Personen eingehen.
... Third, the assumption that underpins the drive to increase youth employment in conflict-affected areas-that employment can be a cure for a country's political and social ills-must be set aside once and for all. These areas are characterized by weak institutions, political and policy instability, which makes them more vulnerable to external shocks (Blattman & Ralston, 2015;Hoffman & Marchat, 2017). In some areas, non-state authorities control access to economic resources and the limited rule of law creates uncertainty over property ownership and thus deters investment. ...
Article
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Motivation: The Sustainable Development Goals target decent work for all, including youth, by 2030. In sub-Saharan Africa (SSA), however, a "youth employment crisis" is now central to public and policy discourse. Consequently, the idea of "investing in youth" grows in importance, leading to a proliferation of interventions targeted to and specific to youth. Purpose: This article interrogates the framing of the problem as a "youth employment" crisis. Approach and Methods: The article brings together evidence from a range of sources and disciplines, indicates where the evidence supports the current policy orthodoxy and where it does not, and maps out an alternative framing. Five pillars of the dominant narrative about youth employment are identified: demography, violence and civil unrest, training and skills, rural economy and urban economy. Three critical dimensions of Africa's broader employment crisis are highlighted: economic risk, stability and protection. Findings: The dominant narrative about Africa's youth employment crisis foregrounds young people themselves, and strongly suggests that the crisis is all (and often only) about them. Little about the employment crisis, however, is youth-specific. The "it's all about the youth" framing ignores that young people are caught up in a broader "missing jobs crisis" that reflects fundamental structural constraints within African economies. In other words, the problem is with the economy, not the young people. Policy implications: The emphasis on youth-specific targeting and youth-specific interventions is largely misplaced. Instead of initiatives that only or specifically target youth, priority should be given to broader structural issues which have the potential to deliver better and larger results, for both young people and others. Reframing the problem from a youth employment crisis to a missing jobs crisis is a necessary first step. We provide a counter-narrative to support this shift.
... They have been widely promoted as tools to protect poor households in the face of large macroeconomic or agroclimatic shocks, due to their relatively rapid rollout (Ravallion 1999). They are recently getting attention in fragile states as tools to quickly restart local economic activities or target the employment of high risk groups (Blattman & Ralston 2015). Well-known examples include the Employment Guarantee Scheme in Maharashtra (Ravallion, Datt & Chaudhuri 1993) While many studies of cash-for-work programs focus on the potential crowding out effect of the program on labor market outcomes or the extent of self-targeting for a given wage rate or participation requirement (Alatas et al. 2013, Murgai, Ravallion & vandeWalle Forthcoming), there is surprisingly limited evidence about the first order effects of the programs in increasing consumption levels or allowing beneficiaries to smooth consumption. ...
... We contribute to the literature on employment in post-conflict situations by using nationally representative household surveys to conduct a comprehensive stocktaking of labor market outcomes in Sri Lanka and a thorough analysis of female and youth labor force participation. Existing reviews of postconflict areas (Blattman and Ralston 2015, Stewart 2015, Cramer 2015 barely mention studies that document labor market outcomes in conflict or post-conflict situations. 1 The few studies that exist on this issue examine narrow, although important, aspects of the labor market. For example, Kondylis (2010) finds higher unemployment levels in the early 2000s among Bosnians who were displaced during the war in the country in the early 1990s. ...
... Evidence on the effectiveness of training programs has been mixed overall (for reviews and meta-analysis, see Blattman and Ralston (2015); Kluve et al. (2016); Bertrand et al. (2013); ...
... Whether programs that target a limited number of participants can replicate the impact of large-scale transfers remains an open question. Here, a "unit of analysis" problem exists (Blattman and Ralston 2015). In other words, given that the reasons why individuals select into violence are often unclear, it is also unclear which programs are well-placed to reduce violence. ...
Article
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In the last decade, well over $10 billion has been spent on employment programs designed to contribute to peace and stability. Despite the outlay, whether these programs perform, and how they do so, remain open questions. This study conducts three reviews to derive the status quo of knowledge. First, it draws on academic literature on the microfoundations of instability to distill testable theories of how employment programs could affect stability at the micro level. Second, it analyses academic and grey literature that directly evaluates the impacts of employment programs on peace-related outcomes. Third, it conducts a systematic review of program-based learning from over 400 interventions. This study finds good theoretical reasons to believe that employment programs could contribute to peace. However, only very limited evidence exists on overall impacts on peace or on the pathways underlying the theories of change. At the program level, the review finds strong evidence that contributions to peace and stability are often simply assumed to have occurred. This provides a major challenge for the justification of continued spending on jobs for peace programs. Instead, systematic and rigorous learning on the impacts of jobs for peace programs needs to be scaled up urgently.
... The findings of these studies suggest that the impact of training programs depends heavily on the content, the context in which the program is implemented and the target group. Moreover, even if these programs are effective, they are not necessarily cost-effective (Blattman and ralston 2015). finds that training programs cost an average of US$17,000-US$60,000 per additional person employed, which is a fairly inefficient outcome. ...
... Such projects do not reach the most marginalized to employment opportunities beyond providing training (Mercy Corps 2015). On the other hand, programs that emphasize social, emotional, and planning-related soft skills may be a powerful violence reduction tool, according to emerging evidence from recent behavioral programs (Blattman and Ralston 2015). ...
... However, evidence from extremely fragile settings such as Afghanistan remains scarce. Our results are consistent with the limited evidence on interventions aiming to generate impacts in poor and fragile states, which suggests that injections of capital can stimulate self-employment and raise long-term earning potential, often when implemented 6 together with complementary interventions (Blattman and Ralston, 2015). In contrast, it is unclear that interventions targeting one mechanism can produce similar impacts on poverty. ...
... The pandemic has highlighted the importance of digital skills and the need for more targeted investment in technical skills to match the demand for labour in such circumstances. Policymakers must support, incentivize, and carefully design (Blattman and Ralston, 2015) the development of skills by vulnerable workers in high growth areas, particularly the digital and green economies. ...
Conference Paper
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Since it began in March 2020, the COVID-19 pandemic has devastated the world economy. The impact on MENA countries and their citizens can be framed by the trade-off between lives and livelihoods: the attempt to save lives by imposing social distancing and strict lockdowns has had a severe impact on the ability of workers to maintain their livelihoods as businesses have downsized or shut down in the face of declining demand. MENA countries have also suffered from the simultaneous oil price shock, which has had both direct effects on oil-exporting countries and indirect impacts on oil-importing and fragile countries, through the effect on migrant workers. In this study, we investigate the potential impact of the COVID-19 pandemic, by examining the extent to which jobs can be successfully performed remotely. We develop a teleworkability index using micro data on occupational characteristics. We find that relatively few jobs in MENA countries are compatible with teleworking. While this share varies considerably by industry, gender, age and the nature of employment (formal vs informal), the digital divide (a lack of reliable access to vital tools for teleworking, such as a personal computer and reliable internet access) make teleworking unlikely in practice even for those whose jobs could potentially be performed remotely. Our results confirm that the workers who were most vulnerable before the pandemic will be the hardest hit.
... In addition, McKenzie (2017) emphasizes the need to also consider the cost-effectiveness of interventions. Here, trainings and skill development programs perform particularly bad; for instance, no training program included in the analysis of Blattman and Ralston (2015) passes the cost-benefit test. Therefore, there is clearly a need to tailor interventions to the needs and constraints faced by the actual target group; and also identify potential bottlenecks that might hamper the participants from reaping the full benefits of the interventions (Datta et al., 2018). ...
... Whether these Dutch-funded programmes have been effective is beyond the scope of this policy review. 104 However, a recent study of employment and skill training programmes in developing countries concluded that, in general, these programmes have shown little impact on poverty, especially given the relatively high programme costs per trainee (Blattman and Ralston, 2015). The authors also found that one-off asset transfers (in the form of cash, capital goods, or livestock) -which were often complemented with a simpler, lower-cost training programme -are a more cost-effective alternative to stimulate self-employment and raise long-term income potential. ...
... These skills and capabilities have not received much attention in the similar literature about the developing countries, especially those countries that have a high percentage of unemployed university graduates; the literature rather tends to concentrate on employment generation for their poor economies and fragile regions (Groh et al., 2012;Premand et al., 2016;Blattman and Ralston, 2017). Also, previous studies tend to ignore the employees' viewpoint about attaining and maintaining the skilful jobs, even though the employees can better identify the required skills based upon which they had been recruited, and which they are still practicing at their work. ...
Article
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Purpose- The purpose of this research is to explore the employer and employee perspectives about the employability skills of skilful jobs. The research is conducted in a developing country (Palestine) which has a high percentage of university graduates, high unemployment rate and intense job competition. This paper defines skilful jobs as those that require employees who have attended a college or university and have completed a two-year diploma or a four-year degree. Design/methodology/approach-This research integrates the components of discussion with local experts in the skilled labour market, primary data from employers (N 415) and primary data from employees (N 880). Binary logistic regression is used to measure the relationship between the dependent variable (likelihood of hire or not hire) and independent variables (job applicants' hard and soft skills). Findings-The results from both employer and employee data revealed that the previous work experience, computer skills, professional certifications and high grade point average have significant impact on hiring and recruitment in the skilful jobs. In addition to these, the employers seek applicants who have communication skills. However, the employees consider personal relationship with employers to be a highly significant factor in accepting job offers. Practical implications-To increase their likelihood of obtaining a skilful job, and then sustaining it, the job seekers should hone their soft skills and acquire professional certifications. The universities should adapt their curriculum to match these skills and move their focus from disciplinary knowledge to competencies. The public policy makers should design awareness and capacity building programmes that will facilitate the recent graduates' integration into the labour market. The empirical model in this study shows that previous work experience is the most important recruitment factor for employers-accordingly, creating internships and apprenticeship opportunities would be its clear policy implication. Originality/value-The study contributes to the literature by providing a parsimonious employability model of skilful jobs, which fits as much as possible the perspectives of the employers and employees about the employability skills in a developing country.
... First, public works can help participants overcome capital constraints. Several experiments have found relatively large returns to capital for poor households (for a review, see Blattman and Ralston (2015)). Common instruments to make capital available to youth, such as micro credit, have not proven very effective. ...
Thesis
Employment programs are increasingly being used as policy instruments for poverty reduction in Sub Saharan Africa. In fragile countries especially, this is a strategic instrument to restore social stability. In addition to job creation, a major employment challenge is to support the productivity of people working in independent activities. In Sub Saharan countries, 80 percent of the workforce is engaged in small independent activities. However, there is limited evidence on both the employment and social impact of employment programs, and their design features. Using rigorous impact evaluation methods and a randomized controlled trial design, this thesis provides empirical evidence on the effectiveness of two employment programs supporting a shift towards more productive activities in Côte d’Ivoire. The first chapter investigates the impact of a public works program in urban areas. We find that the public works functions as a safety net in the short term. However, the evidence regarding its longer-term productive impacts is weak. We document how alternative targeting methods could improve the cost-effectiveness of the program. In the second and third chapter, we study a micro-entrepreneurship program providing training and access to capital targeted towards rural areas, in regions characterized by significant tensions between ethnic groups. We find that injecting capital or improving access to savings and credit through enhanced saving groups have similar positive effects on activities. However, in both interventions it did not significantly increase earnings. We find economic spillovers for both, positively affecting non beneficiaries’ income-generating activities. Social relations are locally improved, but this does not extend more broadly to the rest of the community. The two evaluations emphasize that more research is needed to better understand and design employment interventions.
... The expectation elicitation exercise conducted here both serves as an illustration of an approach that could be used in other studies to reveal the extent to which impact evaluations confirm or contrast with existing priors, as well as serving to show that the results generated here are different from what many people would expect. While these results are disappointing, they are consistent with findings from recent overviews of vocational training programs (Blattman and Ralston, 2015) and business training programs (McKenzie and Woodruff, 2014) which have noted that these other forms of training programs have also often struggled to show significant employment impacts. This other literature suggests two possible reasons for the lack of effectiveness of soft skills training here. ...
... But since many young people may leave a firm once they have received this experience, there is a concern that firms underprovide job experience from a public policy perspective. Firms may be particularly reluctant to invest in training workers in fragile and conflict-affected states, where political and economic uncertainty makes many types of investments additionally risky (Blattman and Ralston, 2015). This paper reports on a randomized experiment testing, an internship program in the Republic of Yemen that was intended to help overcome these constraints and provide employment experience to educated youth. ...
... This is the first reason that mentorship is more cost-effective than training: the benefit is substantially higher. Consistent with previous literature summarized in McKenzie and Woodruff (2014) and Blattman and Ralston (2015), training generates no effect on profit. Mentorship, on the other generates an effect that is 438 percent larger than training. ...
Article
Despite billions of dollars spent by policy institutions and academics, very few programs designed to increase managerial skills among microenterprises are cost-effective. This short paper highlights a mentorship program designed to provide managerial skills to Kenyan microenterprises, and it provides a detailed cost-benefit analysis. For each dollar spent on a treated firm, average profit increases by 1.63 USD; the result stems from both a higher program impact and lower cost relative to existing training programs. Motivated by this increased cost-effectiveness, the study then compares the program to the large literature focusing on “supply-side” interventions designed to increase managerial capacity in small firms, and it highlights particular margins on which mentorship improves on classroom training and also where training should focus.
... The skills mismatch is a well-known supply side problem and policymakers should support, incentivize, and carefully design the development of skills of vulnerable workers in high growth areas, particularly the digital and green economies (Blattman and Ralston, 2015). Providing opportunities for vocational training appears to be a viable approach to bridging the skill supply among fresh graduates of formal educational programs, and the skill needs professed by employers (Dibeh et al. 2019b). ...
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Purpose The purpose of this paper is to investigate the prevalence and drivers of employment vulnerability among youth in Egypt, Jordan and Tunisia, and their propensity to transition to better jobs over time. Design/methodology/approach The analysis is based on longitudinal data from Labor Market Panel Surveys spanning 6–20 years. The authors use transition matrices to examine the prevalence of transitions between labor market statuses for the same individuals over time, distinguishing between youth and non-youth, and men and women, as well as multinomial logistic regressions that control for individual and family background, including previous labor market status, family wealth and parental education. Findings The paper finds that youth in all three countries were disadvantaged in terms of labor market outcomes with most young men in particular ending up in vulnerable jobs while women of all ages were most likely to exit the labor market all together, unless they had formal jobs. Moreover, youth who started out in the labor market in a vulnerable job were unlikely to move to a better-quality job over time. Family wealth, parental education and father's occupation were found to be important determinants of labor market outcomes and vulnerability, even after a long period of work experience. Social implications The paper finds that wealth effects, parental education and occupation effects follow workers throughout their careers, implying low equality of opportunity and inter-generational and lifetime mobility. Originality/value The findings indicate worsening labor market outcomes over time, heavily influenced by family background. High levels of vulnerable employment persistence, regardless of skill and experience, reinforce the importance of initial labor market outcome on the quality of lifetime employment prospects.
... Vocational training for ex-combatants in a Liberian DDR program was shown to increase employment, but not income (Levely 2014). Blattman and Ralston (2015) conclude that postconflict vocational training has little impact on economic empowerment and social integration; however, their review covers no programs targeting persons with disabilities. This paper examines the impacts of vocational training on economic empowerment and social reintegration among demobilized ex-combatants with disabilities in Rwanda. ...
Research
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Disability-inclusive development is receiving growing attention as a pressing international development issue. Disability-inclusive development is especially urgent and complicated in post-conflict countries. This paper examines the impacts of vocational training on economic empowerment and social reintegration among demobilized ex-combatants with disabilities in Rwanda. This is the first quasi-experimental study on vocational training for disabled ex-combatants. Exploiting the variation in the timing of training uptake within the same training course, we employ a pipeline approach in the following three steps: (1) trimming to guarantee common support within courses, (2) exact matching on key covariates within courses, and (3) regression controlling for covariates within courses based on the matched sample. The results show that the training greatly increased not only employment and income, but also trainees' reintegration into the family and community. The results are robust to potential omitted variable bias and attrition bias according to a coefficient stability test and bound analysis, respectively. Our findings suggest a significant potential of vocational training for disabled ex-combatants in disarmament, demobilization, and reintegration programs. Our study exemplifies the utility of a credibly designed pipeline approach, which can be applied in a wide range of development projects in practice.
... Entrepreneurship promotion programs fall under the umbrella of active labor market policies (ALMPs). Governments and international agencies, particularly in low-and middle-income contexts, pursue such programs despite the evidence on their ineffectiveness and high costs (Blattman and Ralston, 2015;Grimm and Paffhausen, 2014). Entrepreneurship promotion ALMPs address some combination of entrepreneurship/business training, access to finance, business support services and access to markets (ILO, 2017). ...
Article
Purpose-Entrepreneurship is promoted as a solution to high rates of youth unemployment around the world and especially in the Middle East and North Africa (MENA). This paper investigates the potential for youth entrepreneurship to alleviate unemployment, focusing on Egypt, Jordan and Tunisia. Design/methodology/approach-The authors examine who entrepreneurs are (in comparison to the unemployed), using multinomial logit models. The authors compare entrepreneurs' and wage workers' working conditions and earnings. They exploit panel data to assess earnings and occupational dynamics. They specifically use the Labor Market Panel Surveys of 2012 (Egypt), 2016 (Jordan), and 2014 (Tunisia), along with previous waves. Findings-The authors find that entrepreneurs are the opposite of the unemployed in MENA. The unemployed are disproportionately young, educated and women. Entrepreneurs are older, less educated and primarily men. Entrepreneurship does not generally lead to higher earnings and does have fewer benefits. Originality/value-Promoting youth entrepreneurship is not only unlikely to be successful in reducing youth unemployment in MENA, but also, if successful, may even be harmful to youth.
... The Zambian national youth polices are not alone in this. For many programmes in SSA, identifying linkages between the dynamics in the labour market, entrepreneurship interventions and actual employment has largely been based on faith and theory (Blattman and Ralston 2015). For example, innovation and value (added) in relation to youth-run enterprises is a severely under-researched topic in Zambia 13 . ...
Thesis
Entrepreneurship has become an increasingly dominant policy solution to youth employment in sub-Saharan Africa. Understanding the conceptualisation of entrepreneurship within policy is, therefore, important because it provides insight into the ability of the policy to address youth employment. To date, most policy analyses have focused on interventions that best stimulate entrepreneurial outcomes and not on entrepreneurship itself. This paper examines the national youth policies in Zambia between 1994 and 2015 to understand how entrepreneurship is conceptualised in policy. The study concludes that entrepreneurship as a youth employment strategy has confusing and contradictory intentions. These intentions are misaligned with policy and consequently, impact the ability of entrepreneurship to address youth employment in Zambia.
Chapter
A greater proportion of international aid spending is targeted towards conflict-affected and fragile environments. Concurrently, donors have higher standards for evidence of what programs are effective. The combination of these two trends provides social psychologists with ample opportunity to understand whether and under what conditions some core theories, such as the contact hypothesis and social identity theory, apply in the field. However, rigorously evaluating the effectiveness of development programs in conflict environments, particularly peacebuilding programs, through Randomized Control Trials (RCTs), comes with numerous challenges. These include (1) insecurity and consistent access to populations; (2) ethics of randomization especially, during a humanitarian crisis; and (3) how to maintain the integrity of a program and research design within a changing context. As a result, implementers are often resistant to conducting RCTs. Based on my experience as a scholar-practitioner, I describe the benefits of RCTs that implementers may be unaware of, such as how RCTs help disentangle the impacts of the program from the changing context, as well as how to address the most common concerns of implementers. The hope is that by better understanding and addressing implementers’ concerns, researchers will have more opportunities to rigorously test programs and theories, simultaneously improving theory and peacebuilding and development interventions globally.
Thesis
This thesis consists of four papers in the field of applied microeconomics that apply rigorous evaluation techniques to explore two broadly connected research topics: public support for redistribution through tax and transfer policies in a range of countries; and the impact of flagship tax and transfer policies in a fragile state, Papua New Guinea (PNG). In Chapter 2, I test a key assumption of seminal theories about preferences for redistribution, which is that relatively poor people should be the most in favor of redistribution. I conduct a randomized survey experiment with over 30,000 participants across 10 countries, half of whom are informed of their position in the national income distribution. Contrary to prevailing wisdom, people who are told they are relatively poorer than they thought are less concerned about inequality and their support for redistribution is unchanged. This finding is driven by people using their own living standard as a "benchmark" for what they consider acceptable for others. In Chapter 3, I test the elasticity of people's voting intentions and preferences for redistribution to information about inequality through a large-scale, randomized survey experiment in Indonesia. Respondents either receive information about the level of national inequality, their position in the national income distribution or they receive no information. The first treatment raised people's concern about inequality and substantially increased the likelihood they would vote against the President. The second treatment lowered richer respondents' support for redistribution. These results provide empirical support from a significantly different political and economic context for seminal theories that predict high inequality leads to greater opposition to the incumbent. In Chapter 4, I examine whether "nudges" can increase tax revenue in settings that lack high rates of compliance and effective enforcement through two population-wide randomized control trials of firms in PNG. I test the impact of SMS messages and flyers that either remind SMEs of due dates or inform them about the public benefits from paying tax. Consistent with theories of tax evasion, the treatments increase compliance, but do not increase revenue. In Chapter 5, again on PNG, I examine whether there is an additional benefit from participating in a comprehensive Active Labor Market Program (ALMP) beyond completing a Labor Intensive Public Works Program (LIPW). Using a difference-in-difference identification strategy, I show participants that completed an ALMP were around twice as likely to be employed in the formal sector 9 to 12 months later. This finding is driven by employers using the program as a low cost, low risk and relatively low effort way of hiring new employees. Collectively, these papers illustrate a number of challenges facing policy makers seeking to reduce inequality through tax and transfer policies. I show it is incredibly difficult to increase public support for redistribution and that flagship policy initiatives to increase tax revenue and create opportunities for disadvantaged youth in PNG tend to have limited impact.
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The purpose of this study was to test Fahim Khan's model. The model states that the existence of government assistance and social security will increase one's chances of becoming entrepreneurs. The model has the argument that government assistance and social security will provide better risk protection for entrepreneurs. By analyzing more than 15.000 sample data from the Indonesian Family Life Survey, this study examines the proposed Fahim Khan model that Islamic economics encourages entrepreneurship with two important factors, financial and funding social security institutions. The results of this study are obtained from the logistic regression method stating that there are influences of social security and financial institution financing on the opportunity to open a business. Furthermore, this study produced several important findings, such as bank loans and social security have an impact to the opportunity for Indonesian household of opening a business. Either partially or simultaneously all independent variables (bank loans, pension security, insurance claims, national healthcare security membership, national accident care security membership, national pension care membership, national death care security membership) have a significant effect on the business. The results show that there are three variables that have a negative relationship with business, namely the national healthcare security membership variable, the national accident care security membership variable and the national pension care security membership variable.
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The Agricultural sector in South Africa is amongst the main contributors to job-creation South Africa. Since the post-apartheid era, South Africa has seen a severe transformation in this sector, of which previously disadvantaged farmers (especially women) are now on the forefront in terms of new developments, and SME business expansion. However, the efforts of the government to sustain SMEs are yet to alleviate the challenges agricultural SMEs are facing. This article looks at the determinants of business successes for female owned SMEs. The trustworthiness and internal consistency examination of the instrument was done, with test re-test reliability method and Cronbach Alpha index. They both generated an R-value of 0.70 and 0.875 respectively. Multiple Regression technique was used in estimating the coefficients’ of impact on success. Findings showed that certain characteristics of the entrepreneur, including Entrepreneurship Skill, Financial Resources, Capital Start-up Amount and Customer and Market Access have a significant impact on Female Entrepreneurship Success. We recommend a major overhaul of government interventions designed to enhance the skills of female entrepreneurs as well as broadening their customer and market access base. This has become imperative for addressing the challenges of business success for female entrepreneurs.Keywords: Business, Entrepreneurship, Female, SMEJEL Classifications: D6, M1, M2DOI: https://doi.org/10.32479/ijefi.11274
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The prediction-control (PC) space offers a theoretical framework for the entrepreneurial method and shows how it can foster the development of a middle class of business, defined as ventures that grow and endure over time, but don’t necessarily grow very large in size. Analogous to the middle class in history fostered by the scientific method, the middle class of business is likely to provide spaces of non-churn and non-change requisite for the cocreation of robust communities and new ends worth achieving for human well-being. Such new ends are also likely to be crucial to tackling the problems of the 21st century and beyond.
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This paper aims to assess the impact of the Moroccan wage subsidy program "Idmaj". It applies the propensity score matching method to the data from a survey conducted by the Ministry of Labour on a sample of eligible individuals. Our results suggest that wage subsidies in Morocco have a positive but marginally significant effect on reducing unemployment and improving employment and a significant negative impact on wages. It also highlights some heterogeneous effects of the program, particularly on women. Finally, it appears that the program did not serve as a stepping stone to higher-paying, high-quality work and, in contrast, it had a stigmatizing effect on beneficiaries.
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Despite the popularity of business training among policy-makers, its use has faced increasing scepticism. Most of the first randomized experiments could not detect statistically significant impacts of training on firm profits or sales. I reassess the evidence for whether small business training works, incorporating more recent results. A meta-analysis of these estimates shows that training increases profits and sales on average by 5–10 per cent. This is in line with what is optimistic to expect, but impacts of this magnitude are too small for most experiments to detect. I then discuss five approaches for improving the effectiveness of traditional training by incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology. The challenge is then how to deliver a quality programme on a cost-effective basis at a much larger scale. Three possible approaches to scaling up training are discussed: using the market, using technology, or targeting and funnelling firms.
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Disability-inclusive development is receiving growing attention as a pressing international development issue. Disability-inclusive development is especially urgent and complicated in post-conflict countries. This paper examines the impacts of vocational training on economic empowerment and social reintegration among demobilised ex-combatants with disabilities in Rwanda. This is the first quasi-experimental study on vocational training for disabled ex-combatants. Exploiting the variation in the timing of training uptake within the same training course, we employ a pipeline approach in the following three steps: (1) trimming to guarantee common support within courses, (2) exact matching on key covariates within courses, and (3) regression controlling for covariates within courses based on the matched sample. The results show that the training greatly increased not only employment and earnings, but also trainees’ reintegration into the family and community. The results are robust to potential omitted variable bias and attrition bias according to a coefficient stability test and bound analysis, respectively. Our findings suggest a significant potential of vocational training for disabled ex-combatants in disarmament, demobilisation, and reintegration programmes. Our study exemplifies the utility of a credibly designed pipeline approach, which can be applied in a wide range of development projects in practice.
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With the purpose of ending wars, international organizations and governments promote reintegration projects that seek to transform combatants affiliated with illegal armed groups into citizens through education. The assumption behind these efforts is that through education, ex-combatants will become economically independent, overcome marginalization, experience personal transformations, and integrate into communities. This paper questions this optimistic narrative of education by highlighting the differentiated meanings of education for ex-combatants reintegrating in urban Colombia. Listening to the voices of ex-combatants who have engaged in technical and vocational education programs, this paper compares policy narratives with ex-combatants’ narratives regarding the role of education in the reintegration process. The analysis reveals how for ex-combatants, education is a complex social practice that redistributes resources and contributes to positive psychosocial and empowerment transformations. At the same time, it is a process of insertion into an individualistic system and adaptation to unequal participation within the country’s socio-economic hierarchy.
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We study two interventions for poor and underemployed Ethiopian youth: a $300 grant to spur self-employment, and a job offer to an industrial firm. Each one is designed to help overcome a common barrier to employment—financial market imperfections, or matching frictions. We find significant impacts on occupational choice, income, and health in the first year. After five years, however, we see no evidence of long run effects of either intervention. The grant led short-run increases in self-employment, productivity and earnings, but these appear to dissipate over time as recipients exit their businesses. Worrisomely, offers of factory work had no effect on employment or earnings, but led to serious adverse effects on health after one year. Evidence of these effects is gone after five years as well, however. These results point to convergence in most outcomes, and suggest that one-time and one-dimensional interventions may struggle to overcome barriers to wage- or self-employment.
Chapter
In this chapter, we aim at demonstrating how entrepreneurship education can play a crucial role in the socio-economic development of Arab countries. First of all, we explained the theoretical foundations of entrepreneurship education, its benefits, and its components (learning content, pedagogical methods, faculty skills, etc.). Secondly, we showed how the Arab world could leverage entrepreneurship education to make better use of the potential of young people and women by strengthening their entrepreneurial skills. Thirdly, we explained how entrepreneurship education boosts firms’ competitiveness and, more particularly, family businesses as an essential growth driver in Arab countries. Finally, we argued that entrepreneurship education is necessary but not enough. Its generated impact depends on the business environment and, more particularly, on the institutional agents, public policies, and incentives that Arab governments put in place to promote start-ups and entrepreneurial projects.
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The labor market prospects of young, unskilled men fell dramatically in the 1980s and improved in the 1990s. Crime rates show a reverse pattern: increasing during the 1980s and falling in the 1990s. Because young, unskilled men commit most crime, this paper seeks to establish a causal relationship between the two trends. Previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime, and found inconclusive results. In contrast, this paper examines the impact of both wages and unemployment on crime, and uses instrumental variables to establish causality. We conclude that both wages and unemployment are significantly related to crime, but that wages played a larger role in the crime trends over the last few decades. These results are robust to the inclusion of deterrence variables, controls for simultaneity, and controlling for individual and family characteristics.
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We present results from six randomized control trials of an integrated approach to improve livelihoods among the very poor. The approach combines the transfer of a productive asset with consumption support, training, and coaching plus savings encouragement and health education and/or services. Results from the implementation of the same basic program, adapted to a wide variety of geographic and institutional contexts and with multiple implementing partners, show statistically significant cost-effective impacts on consumption (fueled mostly by increases in self-employment income) and psychosocial status of the targeted households. The impact on the poor households lasted at least a year after all implementation ended. It is possible to make sustainable improvements in the economic status of the poor with a relatively short-term intervention. Copyright © 2015, American Association for the Advancement of Science.
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Post-conflict economic reconstruction is a critical part of the political economy of peacetime and one of the most important challenges in any peace-building or state-building strategy. After wars end, countries must negotiate a multi-pronged transition to peace: Violence must give way to public security; lawlessness, political exclusion, and violation of human rights must give way to the rule of law and participatory government; ethnic, religious, ideological, or class/caste confrontation must give way to national reconciliation; and ravaged and mismanaged war economies must be reconstructed and transformed into functioning market economies that enable people to earn a decent living. Yet, how can these vitally important tasks each be successfully managed? How should we go about rehabilitating basic services and physical and human infrastructure? Which policies and institutions are necessary to reactivate the economy in the short run and ensure sustainable development in the long run? What steps should countries take to bring about national reconciliation and the consolidation of peace? In all of these cases, unless the political objectives of peacetime prevail at all times, peace will be ephemeral, while policies that pursue purely economic objectives can have tragic consequences. This book argues that any strategy for post-conflict economic reconstruction must be based on five premises and examines specific post-conflict reconstruction experiences to identify not only where these premises have been disregarded, but also where policies have worked, and the specific conditions that have influenced their success and failure. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780199237739/toc.html
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Policy makers view public sector-sponsored employment and training programs and other active labor market policies as tools for integrating the unemployed and economically disadvantaged into the work force. Few public sector programs have received such intensive scrutiny, and been subjected to so many different evaluation strategies. This chapter examines the impacts of active labor market policies, such as job training, job search assistance, and job subsidies, and the methods used to evaluate their effectiveness. Previous evaluations of policies in OECD countries indicate that these programs usually have at best a modest impact on participants' labor market prospects. But at the same time, they also indicate that there is considerable heterogeneity in the impact of these programs. For some groups, a compelling case can be made that these policies generate high rates of return, while for other groups these policies have had no impact and may have been harmful. Our discussion of the methods used to evaluate these policies has more general interest. We believe that the same issues arise generally in the social sciences and are no easier to address elsewhere. As a result, a major focus of this chapter is on the methodological lessons learned from evaluating these programs. One of the most important of these lessons is that there is no inherent method of choice for conducting program evaluations. The choice between experimental and non-experimental methods or among alternative econometric estimators should be guided by the underlying economic models, the available data, and the questions being addressed. Too much emphasis has been placed on formulating alternative econometric methods for correcting for selection bias and too little given to the quality of the underlying data. Although it is expensive, obtaining better data is the only way to solve the evaluation problem in a convincing way. However, better data are not synonymous with social experiments.
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In economic models of crime, changing economic incentives alter the participation of individuals in criminal activities. We critically appraise the work in this area. After a brief overview of the workhorse economics of crime model for organizing our discussion on crime and economic incentives, we first document the significant rise of the economics of crime as a research field and then go on to review the evidence on the relationship between crime and economic incentives. We divide this discussion into incentives operating through legal wages in the formal labor market and the economic returns to illegal activities. Evidence that economic incentives matter for crime emerges from both.
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I estimate the impact of attending a first-choice middle or high school on adult crime, using data from public school choice lotteries in Charlotte-Mecklenburg school district (CMS). Seven years after random assignment, lottery winners had been arrested for fewer serious crimes and had spent fewer days incarcerated. The gain in school quality as measured by peer and teacher inputs was equivalent to moving from one of the lowest-ranked schools to one at the district average. The reduction in crime comes largely from years after enrollment in the preferred school is complete. The impacts are concentrated among high-risk youth, who commit about 50% less crime across several different outcome measures and scalings of crime by severity. I find suggestive evidence that school quality explains more of the impact in high school, whereas peer effects are more important in middle school. © The Author(s) 2011. Published by Oxford University Press, on behalf of President and Fellows of Harvard College. All rights reserved.
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We use georeferenced information on the location of violent events in sub-Saharan African countries and provide evidence that external income shocks are important determinants of the intensity and geography of civil conflicts. More precisely, we find that (a) the incidence, intensity, and onset of conflicts are generally negatively and significantly correlated with income variations at the local level; (b) this relationship is significantly weaker for the most remote locations; and (c) at the country level, these shocks have an insignificant impact on the overall probability of conflict outbreak but do affect the probability that conflicts start in the most opened regions. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology 2015.
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We study a government program in Uganda designed to help the poor and unemployed become self-employed artisans, increase incomes, and thus promote social stability. Young adults in Uganda’s conflict-affected north were invited to form groups and submit grant proposals for vocational training and business start-up. Funding was randomly assigned among screened and eligible groups. Treatment groups received unsupervised grants of $382 per member. Grant recipients invest some in skills training but most in tools and materials. After four years, half practice a skilled trade. Relative to the control group, the program increases business assets by 57%, work hours by 17%, and earnings by 38%. Many also formalize their enterprises and hire labor. We see no effect, however, on social cohesion, antisocial behavior, or protest. Effects are similar by gender but are qualitatively different for women because they begin poorer (meaning the impact is larger relative to their starting point) and because women’s work and earnings stagnate without the program but take off with it. The patterns we observe are consistent with credit constraints.
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We estimate the effect of a large rural workfare program in India on private employment and wages by comparing trends in districts that received the program earlier relative to those that received it later. Our results suggest that public sector hiring crowded out private sector work and increased private sector wages. We compute the implied welfare gains of the program by consumption quintile. Our calculations show that the welfare gains to the poor from the equilibrium increase in private sector wages are large in absolute terms and large relative to the gains received solely by program participants.
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Causal evidence on microcredit impacts informs theory, practice, and debates about its effectiveness as a development tool. The six randomized evaluations in this volume use a variety of sampling, data collection, experimental design, and econometric strategies to identify causal effects of expanded access to microcredit on borrowers and/or communities. These methods are deployed across an impressive range of locations-six countries on four continents, urban and rural areas-borrower characteristics, loan characteristics, and lender characteristics. Summarizing and interpreting results across studies, we note a consistent pattern of modestly positive, but not transformative, effects. We also discuss directions for future research.
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Does poverty lead to crime? We shed light on this question using two independent and exogenous shocks to household income in rural India: the dramatic reduction in import tariffs in the early 1990s and rainfall variations. We find that trade shocks, previously shown to raise relative poverty, also increased the incidence of violent crimes and property crimes. The relationship between trade shocks and crime is similar to the observed relationship between rainfall shocks and crime. Our results thus identify a causal effect of poverty on crime. They also lend credence to a large literature on the effects of weather shocks on crime and conflict, which has usually assumed that the income channel is the most relevant one.
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There is a growing awareness that government programs may be important in the fight against internal conflict. Using a regression-discontinuity design, we analyze the impact of the world's largest public-works program, the Indian employment guarantee scheme NREGS, on conflict intensity. We argue that NREGS induces civilians to help the police, improving the police's effectiveness at tracking down insurgents, but making civilians vulnerable to retaliation by the rebels. Our empirical results are consistent with this hypothesis but inconsistent with a number of alternative explanations, and suggest that even programs with implementation problems can have important impacts on violence by promising development.
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The state is among the greatest developments in human history and a precursor of economic growth. Why do states arise, and when do they fail to arise? A dominant view across disciplines is that states arise when violent actors impose a "monopoly of violence" in order to extract taxes. One key fact underlies all existing studies: no census exists prior to the state. In this paper, I provide the first econometric evidence on the determinants of state formation. As a foundation for this study, I conducted fieldwork in stateless areas of Eastern Congo, managing a team that collected village-level panel data on current armed groups. I develop a model that introduces optimal taxation theory to the decision of armed groups to form states, and argue that the returns to such decision hinge on their ability to tax the local population. A sharp, exogenous rise in the price of a bulky commodity used in the video-game industry, coltan, leads armed groups to impose a "monopoly of violence" in coltan villages. A later increase in the price of gold, easier to conceal and hence more difficult to tax, does not. Results based on two alternative identification strategies are also consistent with the model. The findings support the hypothesis that the expected revenue from taxation, in particular tax base elasticity, is a determinant of state formation.
Article
This paper estimates the short-and-medium-run effects of participating in a subsidized vocational training program aimed at improving labor market outcomes of women residing in low-income households in a developing country. We combine pre-intervention data with two rounds of post-intervention data from a field experiment to quantify the short-and-medium-run effects of the program. In the short-run, we find that program participants are significantly more likely to be employed, work additional hours, and earn more. These short-run impact estimates are all sustained in the medium-run. We also identify credit constraints, local access, and lack of proper child care support as important barriers to program participation and completion. We are able to rule out two alternative mechanisms -- signalling and change in behavior that can drive these findings. Finally, a simple cost-benefit analysis suggests that the program is highly cost effective.
Article
Worldwide, 600 million jobs are needed over the next 15 years to keep employment rates at their current level. Because most employment in low and middle income countries is in micro-, small and medium-sized enterprises, governments, non-governmental organizations and donors spend on targeted programs and broader policies to enhance employment creation in these firms. But despite these efforts, not much is known about which of these interventions are really effective. This systematic review synthesizes the existing evidence on the employment impact of these programs. The results show that the effects have so far been very modest. Even if many interventions were relatively successful in boosting self-employment, expanding employment in already existing firms is generally more difficult but eventually easier in somewhat larger firms compared to very small firms. This finding is also true in relative terms, but it is probably not fully independent from the contexts in which firms of different sizes have been observed. The effects of finance interventions have on average been weaker than the effects of entrepreneurship training or business development services. Our study also reveals that about a third of the interventions covered by this review are not primarily designed to create employment but rather strive for income stabilization and poverty reduction. A further striking finding is that the study design matters for the impacts found; randomized controlled trials find systematically smaller effects than quasi-experimental studies. A significant shortcoming of the literature is that almost nothing is known about long term effects and cost-effectiveness and many studies fail to provide a detailed analysis of why certain effects occurred or did not occur — making it hard to extrapolate lessons.
Article
We use a randomized experiment to evaluate Turkey's vocational training programs for the unemployed. A detailed follow-up survey of a large sample with low attrition enables precise estimation of treatment impacts and their heterogeneity. The average impact of training on employment is positive, but close to zero and statistically insignificant, which is much lower than program officials and applicants expected. Over the first year, training had statistically significant effects on the quality of employment, and these positive impacts are stronger when training is offered by private providers. However, administrative data shows that after three years these effects have also dissipated.This article is protected by copyright. All rights reserved.
Article
Why do armed groups recruit large numbers of children as fighters, often coercively? The international community has tried to curb these crimes by shaming and punishing leaders who commit them—in short, making the crimes costlier. Are these policies effective and sufficient? The answer lies in more attention to the strategic interaction between rebel leaders and recruits. We adapt theories of industrial organization to rebellious groups and show how, being less able fighters, children are attractive recruits if and only if they are easier to intimidate, indoctrinate, and misinform than adults. This ease of manipulation interacts with the costliness of war crimes to influence rebel leaders' incentives to coerce children into war. We use a case study and a novel survey of former child recruits in Uganda to illustrate this argument and provide hard evidence not only that children are more easily manipulated in war, but also how—something often asserted but never demonstrated. Our theory, as well as a new “cross-rebel” data set, also support the idea that costliness matters: foreign governments, international organizations, diasporas, and local populations can discourage child recruitment by withholding resources or punishing offenders (or, conversely, encourage these crimes by failing to act). But punishing war crimes has limitations, and can only take us so far. Children's reintegration opportunities must be at least as great as adults' (something that demobilization programs sometimes fail to do). Also, indoctrination and misinformation can be directly influenced. We observe grassroots innovations in Uganda that could be models for the prevention and curbing of child soldiering and counterinsurgency generally.
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This paper provides a synthetic and systematic review on the effectiveness of various entrepreneurship programs in developing countries. It adopts a meta-regression analysis using 37 impact evaluation studies that were in the public domain by March 2012, and draws out several lessons on the design of the programs. The paper observes wide variation in program effectiveness across different interventions depending on outcomes, types of beneficiaries, and country context. Overall, entrepreneurship programs have a positive and large impact for youth and on business knowledge and practice, but no immediate translation into business set-up and expansion or increased income. At a disaggregate level by outcome groups, providing a package of training and financing is more effective for labor activities. In addition, financing support appears more effective for women and business training for existing entrepreneurs than other interventions to improve business performance.
Article
High school dropouts face an uphill battle in a labor market that increasingly rewards skills and postsecondary credentials: they are more likely than their peers to need public assistance, be arrested or incarcerated, and less likely to marry. This report presents results from a rigorous evaluation of the National Guard Youth ChalleNGe Program, an intensive residential program that aims to “reclaim the lives of at-risk youth” who have dropped out. More than 100,000 young people have completed the program since it was launched in the early 1990s. MDRC is conducting the evaluation in collaboration with the MacArthur Foundation Research Network on Transitions to Adulthood. The 17-month ChalleNGe program is divided into three phases: Pre-ChalleNGe, a two-week orientation and assessment period; a 20-week Residential Phase; and a one-year Postresidential Phase featuring a mentoring program. During the first two phases, participants live at the program site, often on a military base. The environment is “quasi-military,” though there are no requirements for military service. The evaluation uses a random assignment design. Because there were more qualified applicants than slots, a lottery-like process was used to decide which applicants were admitted to the program. Those who were admitted (the program group) are being compared over time with those who were not admitted (the control group); any significant differences that emerge between the groups can be attributed to ChalleNGe. About 3,000 young people entered the study in 10 ChalleNGe programs in 2005-2006.
Article
How do income shocks affect armed conflict? Theory suggests two opposite effects. If labour is used to appropriate resources violently, higher wages may lower conflict by reducing labour supplied to appropriation. This is the opportunity cost effect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity effect. Our article exploits exogenous price shocks in international commodity markets and a rich dataset on civil war in Colombia to assess how different income shocks affect conflict. We examine changes in the price of agricultural goods (which are labour intensive) as well as natural resources (which are not). We focus on Colombia's two largest exports, coffee and oil. We find that a sharp fall in coffee prices during the 1990s lowered wages and increased violence differentially in municipalities cultivating more coffee. This is consistent with the coffee shock inducing an opportunity cost effect. In contrast, a rise in oil prices increased both municipal revenue and violence differentially in the oil region. This is consistent with the oil shock inducing a rapacity effect. We also show that this pattern holds in six other agricultural and natural resource sectors, providing evidence that price shocks affect conflict in different directions depending on the type of the commodity.
Article
Elisabeth Wood's account of insurgent collective action in El Salvador is based on oral histories gathered from peasants who supported the insurgency and those who did not, as well as on interviews with military commanders from both sides. She explains how widespread support among rural people for the leftist insurgency during the civil war in El Salvador challenges conventional interpretations of collective action. Those who supplied tortillas, information, and other aid to guerillas took mortal risks and yet stood to gain no more than those who did not.
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Since 1989, international efforts to end protracted conflicts have included sustained investments in the disarmament, demobilization, and reintegration (DDR) of combatants. Yet while policy analysts have debated the factors that contribute to successful DDR programs and scholars have reasoned about the macro conditions that facilitate successful peace building, little is known about the factors that account for successful reintegration at the micro level. Using a new dataset of ex-combatants in Sierra Leone, this article analyzes the individual-level determinants of demobilization and reintegration. Past participation in an abusive military faction is the strongest predictor of difficulty in achieving social reintegration. On economic and political reintegration, we find that wealthier and more educated combatants face greater difficulties. Ideologues, men, and younger fighters are the most likely to retain strong ties to their factions. Most important, we find little evidence at the micro level that internationally funded programs facilitate demobilization and reintegration.
Article
In Asia and Africa particularly, public works programs have significantly mitigated the negative effects of climatic risks on poor farmers, and farm laborers. These programs typically provide unskilled manual workers with short-term employment on projects such as road construction and maintenance, irrigation infrastructure, reforestation, and soil conservation. The implementation of these programs is being handled by small-scale private contractors, Non-Government Officials (NGOs), or social funds. The main constraint in implanting public works programs in much of Africa is due to lack of capacity. These constraints can be eased if donors coordinate their activities, and provide assistance to build private contracting capacity. This paper discusses the rationale behind workfare programs in Africa and Asia with respect to such design features as wage rates, labor intensity, and how they were selected and implemented. Available estimates and evaluations are used, and whether these programs have achieved their goals is presented. The paper concludes with summary lessons from experience.
Article
Research on microfinance is now two decades old. There has been enormous progress in understanding both what it does and why. However a lot of we have learnt has raised new and often quite fundamental questions about the nature of microfinance: Is it primarily about investment, consumption or savings? Why don’t the investments financed by microcredit lead to income growth and what this has to do with the structure of microlending? What is the role of social capital, reputation and group lending? And many others. This paper is an attempt to take stock of this important body of work and to try to identify the most important questions for future research. Expected final online publication date for the Annual Review of Economics Volume 5 is August 2, 2013. Please see http://www.annualreviews.org/catalog/pubdates.aspx for revised estimates.
Article
We estimate the causal effect of a large development program on conflict in the Philippines through a regression discontinuity design that exploits an arbitrary poverty threshold used to assign eligibility for the program. We find that barely eligible municipalities experienced a large increase in conflict casualties compared to barely ineligible ones. This increase is mostly due to insurgent-initiated incidents in the early stages of program preparation. Our results are consistent with the hypothesis that insurgents try to sabotage the program because its success would weaken their support in the population.
Article
Little attention has been paid to the social processes of civil war - the transformation of social actors, structures, norms, and practices - that sometimes leave enduring legacies for the postwar period. In this article, I explore the changes wrought by six social processes: political mobilization, military socialization, polarization of social identities, militarization of local authority, transformation of gender roles, and fragmentation of the local political economy. Some of these social processes occur in peacetime, but war may radically change their pace, direction, or consequences, with perhaps irreversible effects. I trace the wide variation in these processes during the wars in four countries: Peru, El Salvador, Sri Lanka, and Sierra Leone. I analyze the effects of these processes as transformations in social networks. These processes reconfigure social networks in a variety of ways, creating new networks, dissolving some, and changing the structure of others.
Article
Active Labor Market Programs are widely used in European countries, but despite many econometric evaluation studies analyzing particular programs no conclusive cross-country evidence exists regarding "what program works for what target group under what (economic and institutional) circumstances?". This paper aims at answering this question using a meta-analysis based on a data set that comprises 137 program evaluations from 19 countries. The empirical results of the meta-analysis are surprisingly clear-cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that seems to matter for program effectiveness. While direct employment programs in the public sector frequently appear detrimental, wage subsidies and "Services and Sanctions" can be effective in increasing participants' employment probability. Training programs - the most commonly used type of active policy - show modestly positive effects.
Article
This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005. This randomized trial offers a unique opportunity to examine the impact of training in a middle income country. We use originally collected data on individuals randomly offered and not offered training. The program raises earnings and employment for women. Women offered training earn 19.6 percent more and have a 0.068 higher probability of paid employment than those not offered training, mainly in formal-sector jobs. Cost-benefit analysis of these results suggests that the program generates much larger net gains than those found in developed countries. (JEL I28, J13, J24, O15)
Article
This chapter covers selected topics for the 80% of the world's labor force that works in the developing countries. These topics are ones that have: (1) received relatively great attention in developing countries compared to developed economies (i.e., family enterprises, missing labor markets, geographical mobility, health/nutrition effects on productivity) because of their greater importance in developing countries; (2) been considered more extensively for developing than developed labor markets because the nature of institutions, behaviors and available data permit more extensive empirical examination of these topics (i.e., labor adjustments to shocks in the presence of imperfect markets, information problems in labor markets), and (3) been considered extensively for both developing and developed economies but with some different approaches and results for part of the developing country literature (e.g., determinants of and labor market returns to schooling). The discussion is organized around five broad topics: (1) The household enterprise model, surplus labor, disguised employment and unemployment, complete markets and separability, and labor supplies; (2) labor contracts, risks and incentives; (3) determinants of and returns to human capital investments (including health and nutrition in addition to schooling); (4) urban labor markets, labor-market regulations, international trade policies and manufacturing; and (5) distribution and mobility.
Article
Crime is a major activity in the US, with implications for poverty and the allocation of public and private resources. The economics of crime focuses on the effect of incentives on criminal behavior, the way decisions interact in a market setting; and the use of a benefit-cost framework to assess alternative strategies to reduce crime. This essay shows that most empirical evidence supports the role of incentives in the criminal decision: legitimate labor market experiences, sanctions including incarceration, and the risk of apprehension all influence decisions to engage in crime. By putting crime into a market setting, economic analysis highlights the difficulty of reducing crime through incapacitation: when the elasticity of supply to crime is high, one criminal replaces another in the market; and thus the importance of deterring crime by altering behavior. Most analyses show that “crime pays” in the sense of offering higher wages than legitimate work, presumably in part to offset the risk of apprehension. But some important facts about crime — long term trend increases and decreases; the geographic concentration of crime; the preponderance of men and the young in crime — seem to go beyond basic economic analysis.