By 2050, the urban population of Africa is expected to triple, while that of Asia is expected to grow by 61 percent (United Nations, 2014).  This presents policy challenges in many areas, not least finding employment for large numbers of young urban workers. Economists from the Centre for the Study of African Economies in the Department of Economics, in collaboration with the Ethiopian Development Research Institute, have implemented a series of field experiments based in Addis Abada to identify the key factors that inhibit young workers from obtaining secure employment. Addis Ababa is an ideal context to study issues relating to youth labour market exclusion: the city is enjoying rapid economic growth, but a high proportion of the jobs available to young workers are insecure and poorly-regulated jobs. These jobs often do not meet the young urbanites’ aspirations for a stable livelihood and this can feed social tension and political instability.

The research focuses on three sources of search frictions that face young job-seekers in large cities in developing countries. First, many job-seekers are geographically distant from potential employers with few, if any, affordable travel options.  Second, young workers are typically anonymous to potential employers and have little experience in searching for jobs or signalling their skills to potential employers. In 2014 and 2015, this research project implemented three specific interventions, each designed to address a different aspect of job search frictions:

  • A transport subsidy, in which young unemployed workers were offered a monetary reimbursement to cover travel costs.  (This was offered up to three times a week, for 16 weeks.)
  • Job application workshops, designed and implemented in collaboration with an established local institution (Addis Ababa Commercial College), in which participants received advice on how to improve the effectiveness of job applications using CVs and cover letters and on how to approach job interviews.
  • Jobs fairs to increase contact between firms and with unemployed workers.

Both the workshops and the transport treatments were found to be effective in improving the participants’ access to better quality jobs. Participants are more likely to have permanent jobs, and jobs with written contracts when observed approximately six months after treatment.  Moreover, these effects are quantitatively large: for example, both treatments increase the probability of obtaining formal work by about 5.5 percentage points, over a control group mean of about 22%.  These effects are particularly strong for the least educated and for women.  

In contrast, the job fairs had very limited effects.  The fairs appear to have created one job for approximately every 10 firms that attended. The reasons for this were explored and revealed significant evidence of mismatched expectations: by workers, about wages and about firms’ requirements; and by firms about the average quality of job-seekers. There is evidence of learning and updating of beliefs in the aftermath of the job fair. This changes behaviour: both workers and firms invest more in formal job search after participating in a job fairs.  

The findings of this research were presented at the 2016 Conference of the Ethiopian Economic Association, attended by academics and practitioners. The results are expected to inform policy development around the areas of youth employment and urban infrastructure. The team have launched a number of follow-on research projects, including work relating to the role of internships for learning management skills, and research on the effect of wage variation on the attributes of job applicants.

 

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