NOVAFRICA Seminar: “Skills, Signals and Job Search in Low-income Labor Markets: Evidence from a Six-year Two-Sided Field Experiment”

On Wednesday, June 19, at 02.30 pm, the NOVAFRICA Center welcomes Vittorio Bassi, from the University of Southern California, to present his work on skills, signals and job search in low-income labor markets.

Author:
Vittorio Bassi, University of Southern California.

Abstract:

Many developing countries face the key policy challenge of matching workers to good jobs. The search behavior of workers and firms is critical to this matching process. This study presents the results of a six-year field experiment designed to study this problem across urban labor markets in Uganda, a setting in which firms and workers face search frictions. The experiment is two-sided, tracking young labor market entrants, as well as small firms in sectors these workers are searching over. The experimental variation induced relates to: (i) the offer of intense sector specific training to workers; (ii) the offer to match trained workers to firms operating in sectors in which they have been skilled; (iii) the offer to match unskilled workers to firms in sectors that they expressed a desire to be skilled in. The offer of training leads to measurable impacts on the sector specific skills of workers. The worker-firm match offers lead to relatively low rates of call backs to workers, thus generating a signal to workers on their labor market prospects. We then study how these treatments impact the search behaviour of workers along the following dimensions: reservation wages, beliefs over the wage offer distribution and the arrival rate of job offers, search intensity, search direction, and the use of credit markets to finance search. We then study how these dimensions of search translate into long run labor market outcomes for workers such as employment, earnings, and their allocation to good jobs and good sectors. Our results shed light on the importance of underlying sources of worker heterogeneity – namely skills and beliefs about own prospects in the labor market – in determining the matching of workers to jobs in a low-income economy.

Find more about this seminar here.