The Impact of Secondary School Subsidies on Career Trajectories in a Dual Labor Market: Experimental Evidence from Ghana

In 2008, we randomly assigned secondary school scholarships among 2,064 youths in Ghana. This paper exploits fifteen years of follow-up data to examine the impact of access to free secondary education on career trajectories over the first part of the life cycle. Winning a scholarship increases the probability of secondary school graduation from 45% (in the control group) to 73% (in the treatment group), and leads to an increase in knowledge and skills. However, the entry of secondary school graduates (with or without scholarship) in the labor market is very gradual, as many attempt, over many years, to qualify for tertiary programs that are gateways for government jobs. By 2023, 12% of females and 15% of males in the control group have completed a tertiary program. The scholarship increases this share by 11 percentage points for females, but not at all for males. We do not observe significant labor market impacts for men at any point. In contrast, earnings gains of around 24% arise in 2020 and grow to 30% in 2023 for female scholarship recipients, who are 6.7 percentage points (100%) more likely than non-recipients to have a government job by then. We use a simple Harris-Todaro style model of a dual labor market with credit constraints to (a) explain the gendered impacts and (b) discuss the impact that generalized free secondary education would be expected to have in general equilibrium, under different regimes of hiring in the government sector.