University of Oxford
Principal Investigator: Marcel Fafchamps
Jobs are hard to find in Africa. Searching for jobs in African labour markets is both expensive and time consuming and, as a result, new employment opportunities are often not shared equally. Many economies in sub-Saharan Africa have achieved high and sustained growth in the last decade. However, economic expansion has rarely been followed by marked improvements in the labour market outcomes of the poor. There is growing awareness that difficulties in looking for jobs, arising in particular from the geographical distance between low-income residential areas and job hubs, may be preventing economic growth from being truly pro-poor in urban settings. Policy makers have taken a keen interest in these issues, as evidenced both in the targets for the development of job information services and job seeker assistance programmes set in 2010 by the Government of Ethiopia. However, insufficient descriptive data on the ways in which people look for jobs, and a lack of rigorous evaluation of job search assistance programmes in the sub-Saharan African context are limiting the use of these new policy tools.
We will run a novel Randomised Control Trial (RCT) to evaluate two different policies to lower search costs for prospective workers: (i) the provision of transport vouchers for those seeking work; and (ii) the provision of information about job vacancies. We anticipate that, by making the job search process easier, job seekers will search harder for jobs, and will expect better offers from employers before they accept a position. We will investigate the impacts of the two programmes on both individual search choices and labour market outcomes. We will also measure the effects of our policies on those who are not offered the new opportunities.
We will run this trial in Addis Ababa, the capital of Ethiopia. Addis Ababa is an ideal place to study the costs of job search. Ethiopia is currently enjoying impressive economic growth; however, Addis Ababa still has large numbers of urban unemployed. The city is growing and sprawling, with many people living away from the clusters of new jobs. Transportation costs from the suburbs to the city centre are high, making frequent visits to work sites for job applications or interviews unaffordable for many.
We have designed a field experiment to learn about the impediments that young Ethiopians face in finding work. We are focussing on two difficulties in particular: the cost of transport to urban centres, and the problems that talented employees face in persuading potential employers of their worth (sometimes termed ‘asymmetric information problems’). We have designed two different responses ('treatments') to these problems. To deal with the first problem, we will provide vouchers for transport into central Addis Ababa. To deal with the second problem, we will run an innovative screening and certification service. We will randomly choose some participants to receive each treatment, and we will test the difference in outcomes between those who receive the treatments and those who do not. We will collect data using traditional face-to-face interviews; we will also use an innovative phone-based survey to track participants at weekly intervals.
The foremost aim of this study is to estimate the impact of our job search interventions on the probability of transitioning from joblessness to employment. Further, by comparing the impacts of our two treatments, we seek to uncover whether it is a lack of information about job opportunities, or more generally lack of access to the city, that creates the most significant search costs. We will also estimate the different mechanisms that drive these effects, with a particular emphasis on the role of social networks. Together, our results should shed light on the appropriateness of different policies to improve access to jobs for the unemployed in large Ethiopian and other African cities.
We envisage that our project will be able to answer questions related both to the implementation of scalable economic and urban policy, as well as answering important theoretical questions related to job search and the role of frictions in African labour markets. If successful, the impact of our transport subsidy could provide guidance and advocacy for a variety of urban transport programmes. Similarly, the information treatment can provide lessons for the design of vacancies information services for the unemployed. Together, the treatments promise new lessons on the comparative costs and benefits of facilitating job search among urban African youth.