To design policies that lead young labour-market entrants to good jobs, it is important to understand job search processes and what affects the ability to find gainful employment.
To design policies that lead young labour-market entrants to good jobs, it is important to understand job search processes and what affects the ability to find gainful employment. Based on an experiment in Uganda involving two interventions – vocational training and matching workers with firms – this article shows that while training enhances optimism about employment prospects, matching causes discouragement and poorer labour market outcomes in the long run.
Sustainable Development Goals (SDGs)
In the developing world, high fertility rates and limited job creation make access to quality employment increasingly challenging for young labour market entrants (Bandiera et al. 2022, International Labour Organization, 2023). The central question that confronts policymakers and researchers in this scenario is how to design policies that lay the groundwork for long-term success by placing workers onto trajectories leading to good, formal jobs. Understanding how youth search for jobs and what affects their ability to find gainful employment is paramount to achieve this objective.
Introduction
Our study (Bandiera et al. 2023) addresses this question through a field experiment tracking young labour-market entrants in Uganda over six years, and examining the link between skills, expectations, search behaviours and long-run labour market outcomes. It explores this link using experimental variation in workers’ exposure to two standard labour market interventions: vocational training and matching between workers and firms (Card et al. 2017, McKenzie 2017, Carranza and McKenzie 2023). This article summarises the results from the experiment, shedding light on the impact of these interventions on job search and labour market outcomes, with a focus on the role of expectations in mediating these effects.
Interventions
In partnership with the NGO BRAC, in 2012 we recruited 1,400 labour-market entrants from across Uganda to participate in the study. We targeted economically disadvantaged youth, who at baseline were either unemployed (60%) or reliant on insecure, informal jobs (30%). Workers applied to receive vocational training in welding, motor mechanics, electrical wiring, construction, plumbing, hairdressing, tailoring, or catering. These sectors are associated with ‘good jobs’ providing regular employment in high-wage firms.
Workers were randomised into three ‘treatment’ (intervention) groups: (i) vocational training; (ii) vocational training combined with a light-touch matching intervention that passes workers’ details to firms; and (iii) matching only. This was done through a two-step procedure, as outlined in Figure 1. Individuals were first randomly assigned to receive an offer of vocational training. This consisted of a six-month sector-specific and classroom-based training programme delivered by reputable vocational training institutes. In an earlier study, we show that this type of training is highly effective at providing workers with valuable skills (Alfonsi et al. 2020). At the second stage, we offered light-touch matching between workers and firms. Worker-firm matches were restricted to take place between firms in the same sector as the worker had been trained in, or had desired to be trained in, and within the same region. Eligible firms were identified through a census of small and medium enterprises. Firms were presented with the CVs of a maximum of two workers that were either both vocationally trained (T2 in Figure 1), or both unskilled but willing to work (T3 in Figure 1). They could decide to call back for an interview neither, one, or both workers.
Evolution of expectations and reaction to call-backs
Using data from the ‘control’ group (those who did not receive any intervention) over time, we document that although workers have relatively accurate beliefs over the earnings distribution in the study sectors, they are optimistic about the probability of receiving a job offer in these sectors: their expected probability of employment remains much higher than actual job finding rates throughout the study period, although workers gradually become more realistic (Figure 2).
Impact on workers’ search behaviour and long-run labour market outcomes
Our first set of results document how these interventions impact worker expectations and job search behaviour after a year.
Compared to workers in the control group, vocational trainees revise upwards their expectations over the probability of receiving a job offer in one of the study sectors, as well as their expected earnings, thus becoming increasingly optimistic. As a result, they search more intensively relative to the control group and direct their search towards higher quality firms.
Relative to those only offered training, vocational trainees also offered matching hold lower expectations over the probability of receiving a job offer and the distribution of earnings in good sectors. This is consistent with discouragement effects due to the lower-than-expected call-back rate. Such discouragement is reflected in their search behaviour: relative to those only offered vocational training, those additionally offered matching search less intensively, and over lower quality firms.
Workers only offered matching – relative to the control group – do not adjust their expectations or search behaviour on most margins, as their call-back rate is in line with their prior expectations. However, they are significantly more likely to start borrowing to finance self-employment activities in the year following the intervention.
Our second batch of results look at long-term changes in labour market outcomes. Through the follow up surveys after 24, 36, and 56 months, we examine whether the interventions lead to differences in long-term labour market outcomes two to six years later. We find that relative to the control group, those offered vocational training (with or without matching) are more likely to be employed, to transition into regular work, to be employed in good sectors, and end up in better
SDGs, Targets, and Indicators
SDGs Addressed or Connected to the Issues Highlighted in the Article:
- SDG 1: No Poverty
- SDG 4: Quality Education
- SDG 5: Gender Equality
- SDG 8: Decent Work and Economic Growth
- SDG 10: Reduced Inequalities
Specific Targets Under Those SDGs Based on the Article’s Content:
- SDG 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions.
- SDG 4.4: By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs, and entrepreneurship.
- SDG 5.1: End all forms of discrimination against all women and girls everywhere.
- SDG 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
- SDG 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
Indicators Mentioned or Implied in the Article:
- Expected probability of receiving a job offer
- Actual call-back rate
- Employment rate
- Transition into regular work
- Employment in good sectors
- Quality of jobs
- Earnings
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 1: No Poverty | SDG 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions. | – Expected probability of receiving a job offer – Employment rate – Earnings |
| SDG 4: Quality Education | SDG 4.4: By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs, and entrepreneurship. | – Employment in good sectors – Quality of jobs – Earnings |
| SDG 5: Gender Equality | SDG 5.1: End all forms of discrimination against all women and girls everywhere. | – Employment rate – Transition into regular work – Quality of jobs – Earnings |
| SDG 8: Decent Work and Economic Growth | SDG 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. | – Employment rate – Transition into regular work – Employment in good sectors – Quality of jobs – Earnings |
| SDG 10: Reduced Inequalities | SDG 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. | – Employment rate – Transition into regular work – Employment in good sectors – Quality of jobs – Earnings |
Copyright: Dive into this article, curated with care by SDG Investors Inc. Our advanced AI technology searches through vast amounts of data to spotlight how we are all moving forward with the Sustainable Development Goals. While we own the rights to this content, we invite you to share it to help spread knowledge and spark action on the SDGs.
Fuente: ideasforindia.in
Join us, as fellow seekers of change, on a transformative journey at https://sdgtalks.ai/welcome, where you can become a member and actively contribute to shaping a brighter future.
