Aiding the search for good jobs: Evidence from Uganda

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)

• Goal 1: No Poverty
• Goal 4: Quality Education
• Goal 5: Gender Equality
• Goal 8: Decent Work and Economic Growth
• Goal 10: Reduced Inequalities

Introduction

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.

Study Design

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.
• We tracked workers through four follow-up surveys conducted at 24, 36, 48, and 68 months after baseline (corresponding to 12, 24, 36, and 56 months following the conclusion of the interventions).

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.

• Vocational trainees revise upwards their expectations over the probability of receiving a job offer and their expected earnings, becoming increasingly optimistic. They search more intensively relative to the control group and direct their search towards higher quality firms.
• Vocational trainees 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. They search less intensively and over lower quality firms compared to those only offered vocational training.
• Workers only offered matching 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.

Policy implications

The results from this study highlight the foundational role that expectations play in determining workers’ job search and long-term labour market outcomes. They show how young job-seekers can misconstrue information provided to assist them through job search, leading to persistent ‘scarring’ effects that arise from changes in beliefs and impacting subsequent job search behaviour. These results emphasise that interventions aiming to provide (useful) information to workers about the labour market or aspects of job search need to be carefully considered – both in terms of their framing, and their timing. There are three lessons that can be learnt from this study on how to design these types of labour market policies:

1. The framing of job placement interventions can be a key determinant of whether workers end up misattributing information about aggregate labour demand conditions as being informative of the returns to their own ability.
2. The timing of job placement offers is likely to affect the salience of the signal.
3. Relying on vocational institutes to secure jobs for their trainees might not be sufficient to enhance their employability.

Conclusion

Our study provides valuable insights into the impact of vocational training and matching interventions on job search and long-run labour market outcomes for young labour-market entrants in Uganda. The findings highlight the importance of managing expectations and designing effective labour market policies that consider the framing and timing of interventions. By addressing these issues, policymakers can enhance the prospects of young workers in accessing good, formal jobs and contribute to achieving the Sustainable Development Goals.

Further ReadingSDGs, Targets, and Indicators

1. Which SDGs are 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

The issues highlighted in the article, such as access to quality employment, vocational training, job search behavior, and labor market outcomes, are connected to these SDGs.

2. What specific targets under those SDGs can be identified 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 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life.
• 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.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Proportion of youth and adults with relevant vocational skills for employment
• Proportion of women in leadership positions in the labor market
• Employment rate among young labor market entrants
• Proportion of workers in regular jobs
• Earnings of workers in good sectors

These indicators can be used to measure progress towards the identified targets by tracking changes in vocational skills, women’s representation in leadership positions, employment rates, job quality, and earnings.

SDGs, Targets, and Indicators Table

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: 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.