Rapid population growth is a key development challenge facing the African continent in the coming decades. Africa’s population, which currently stands at 1.31 billion, is set to grow to 1.68 billion by 2030. This will place huge demands on many sectors of the economy and raises major concerns about how to provide jobs and livelihoods for Africa’s youth. Rapid population growth and urbanization is also placing substantial demands on Africa’s infrastructure with major investments in public infrastructure, including transport, telecommunications and public housing, crucially needed. The labor-intensive nature of such projects provides an opportunity for job creation in the sector, which is one of the main sectors of employment for young men. However, there is no evidence of the effects of jobs created in big infrastructure projects. The central question underlying this project is what the returns from such job opportunities are.
The setting for our project is Dakar, Senegal. The Government of Senegal (GoS) has recognized that improving urban mobility in the Greater Dakar Area (GDA) is of crucial importance for the development of the Senegalese economy, and it has adopted a comprehensive 5-year plan to address some of the challenges that the sector faces. One of the flagship projects of this plan, with strong presidential support, is a modern bus transport system with high level of service (BRT) linking the city center to the north of the city. Construction on the BRT will begin in June 2020 and is estimated to continue for 20 months. It is expected that there will be between 2000 and 3000 workers employed in the construction of the BRT during this period. Given the large scale of this project, in terms of both cost and number of workers, we aim to study the impact of the jobs created on the welfare of the workers that are hired and their medium-term future employment outcomes. With the BRT construction expected to have additional phases and with plans to replicate the project in other west African cities, it is important to understand the costs and benefits incurred by the construction workers in order to understand whether and how, in future phases of this project and in future infrastructure projects more generally, costs can be minimized for workers and benefits can be increased through complementary programs. We will collaborate with CRBC, the contractor selected for the construction of the BRT.
Using a randomized controlled trial, we will test the impact of receiving a job offer to work on this project. We use the fact that there are much fewer jobs than there are eligible workers to randomly assign jobs to applicants thus creating a control group of workers who do not get a job.
Our project will contribute to two key strands of academic literature. First, recent evidence using micro survey data across countries shows that compared to high-income countries, labor markets in low-income countries are characterized by higher turnover rates, steeper tenure profiles, flatter experience profiles and significant matching frictions (Donovan et al 2020, Bicks et al 2018, Abebe et al 2020). Donovan et al (2019) argue that the high turnover rates and steeper tenure profiles are consistent with theories of endogenous separation, proposing the learning model of Jovanovic (1979) and the job ladder model of Burdett and Mortensen (1998). The randomization of the job offer, in combination with detailed data on key variables such as match quality, search intensity and outside offers, allows us to understand the role of endogenous separation for labor market outcomes in low-income countries. This enables us to test, for example, whether match quality leads to a stronger wage-tenure relationship, as well as the role of search intensity and outside offers for labor market outcomes. Second, we contribute to the broader literature examining the impact of transportation investments on welfare since while job creation is cited as a benefit of these projects, there has been no in-depth examination of this claim.