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Impacts of industrial and entrepreneurial jobs on youth: 5-year experimental evidence on factory job offers and cash grants in Ethiopia

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  • Blattman, Christopher
  • Dercon, Stefan
  • Franklin, Simon

Abstract

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 two common barriers to employment: financial market imperfections and 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.

Suggested Citation

  • Blattman, Christopher & Dercon, Stefan & Franklin, Simon, 2022. "Impacts of industrial and entrepreneurial jobs on youth: 5-year experimental evidence on factory job offers and cash grants in Ethiopia," Journal of Development Economics, Elsevier, vol. 156(C).
    • Handle: RePEc:eee:deveco:v:156:y:2022:i:c:s0304387821001619
    DOI: 10.1016/j.jdeveco.2021.102807
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    3. Craig McIntosh & Andrew Zeitlin, 2022. "Skills and Liquidity Barriers to Youth Employment: Medium-term Evidence from a Cash Benchmarking Experiment in Rwanda," Papers 2209.08574, arXiv.org.
    4. Tefera,Girum Abebe & Buehren,Niklas & Goldstein,Markus P., 2020. "Short-Run Welfare Impacts of Factory Jobs : Experimental Evidence from Ethiopia," Policy Research Working Paper Series 9325, The World Bank.
    5. Grover,Arti Goswami & Imbruno,Michele, 2020. "Using Experimental Evidence to Inform Firm Support Programs in Developing Countries," Policy Research Working Paper Series 9461, The World Bank.
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    7. Matthew W. Ridley & Gautam Rao & Frank Schilbach & Vikram H. Patel, 2020. "Poverty, Depression, and Anxiety: Causal Evidence and Mechanisms," NBER Working Papers 27157, National Bureau of Economic Research, Inc.
    8. Lafortune, Jeanne & Pugatch, Todd & Tessada, José & Ubfal, Diego, 2022. "Can Interactive Online Training Make High School Students More Entrepreneurial? Experimental Evidence from Rwanda," IZA Discussion Papers 15064, Institute of Labor Economics (IZA).
    9. González, Felipe & Prem, Mounu & von Dessauer, Cristine, 2024. "Empowerment or Indoctrination? Female Training Programs under Dictatorship," IZA Discussion Papers 17163, Institute of Labor Economics (IZA).
    10. Annie Alcid & Erwin Bulte & Robert Lensink & Aussi Sayinzoga & Mark Treurniet, 2023. "Short- and Medium-term Impacts of Employability Training: Evidence from a Randomised Field Experiment in Rwanda," Journal of African Economies, Centre for the Study of African Economies, vol. 32(3), pages 296-328.
    11. Paul,Boban Varghese & Dutta,Puja Vasudeva & Chaudhary,Sarang, 2021. "Assessing the Impact and Cost of Economic Inclusion Programs : A Synthesis of Evidence," Policy Research Working Paper Series 9536, The World Bank.
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    14. Stöterau, Jonathan, 2019. "Job training programs for youth in low-income countries," PEGNet Policy Briefs 15/2019, PEGNet - Poverty Reduction, Equity and Growth Network, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Entrepreneurship; Cash transfers; Wage labor; Factories; Employment; Poverty; Occupational choice; Health; Field experiment;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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