Expansion of Small Firms and Job Creation: Evidence from Uganda

This project combines interventions targeting the labor supply side as well as the labor demand side of the labor market. On the labor supply side, three types of interventions are being tested among a sample of unemployed young workers: (i) scholarships to attend a vocational training course; (ii) a job-matching service with potential employers; (iii) wage subsidies for potential employers to hire and train the young workers matched to them through the job-matching service. On the labor demand side, four interventions are being tested on a sample of SMEs operating in urban areas of Uganda: (i) a job-matching service with potential trained and untrained young employees, (ii) wage subsidies to hire and train the potential employees matched through the job-matching service; (iii) wage subsidies to hire and train any employee chosen by the entrepreneur outside the job-matching service; (iv) information about credit products available in the market and explicitly targeted to SMEs.

2013-08-01

2014-02-28

On the worker side, the main outcomes of interest are: skill development, employability, employment, wages, job stability/tenure/quality; additional training gained; knowledge transfer to others in the workers’ social network and to other workers in the hiring firm; changes in expectations and aspirations; other measures of well-being such as consumption. On the firm side, the main outcomes of interest are: growth of capital stock, input usage, output; profitability; changes in employment and wages offered; spillovers to other connected firms.

The experimental design combines interventions on both the worker and the firm side. On the worker side, applications were invited from unemployed young workers for scholarships covering six-month vocational training courses at registered institutions in Uganda. Over-subscription to the scholarship program was exploited to randomly allocate applicants to five treatment groups and one control group: workers in Group 1 and 2 were offered the vocational training scholarship; workers in Group 2 were also matched with potential employers after the end of the training. Group 3 was just offered the matching service without the training scholarship. Group 4 was matched with potential employers, who were also offered a six-month wage subsidy to hire and train the worker. Group 0 was not offered any service and served as control.

On the firm side, SMEs were recruited in a number of urban areas across Uganda by means of a census. Firms identified in the census were allocated to six treatment groups and one control group. The experimental design on the firm side mirrors the one on the worker side: SMEs in Group 2 were matched with workers who received the six-month training at the vocational institutes. Group 3 was matched with untrained applicants to the training scholarship. Group 4 was matched with untrained applicants to the training scholarship and was offered a six-month wage subsidy to hire and train them. Group 5 was offered a six-month wage subsidy to hire and train any new worker of their choice from outside the job-matching service. Group 6 received promotion of a new credit product offered by BRAC NGO and specifically targeted at SMEs. Firms in Group 0 were not offered any intervention and thus served as control. An additional sample of network firms identified as being in the network of directly treated firms at baseline was added to the study to examine any spillover effects of the interventions.

Randomization done in office by a computer (using STATA).

Individual level randomization was conducted on both the worker side and the firm side. So the unit of randomization is the individual applicant (on the worker side) and the individual firm (on the firm side).

No

Worker side: 1714 workers
Firm side: 2306 firms

Worker side: 1714 workers. Firm side: 2306 firms

Worker side:
Group 0 (Control): 451 workers
Group 1 (Training): 390 workers
Group 2 (Training+Matching): 307 workers
Group 3 (Matching): 283 workers
Group 4 (Matching+Wage Subsidy): 283 workers

Firm side:
Group 0 (Control): 512 firms
Group 2 (Training+Matching): 256 firms
Group 3 (Matching): 513 firms
Group 4 (Matching+Wage Subsidy): 257 firms
Group 5 (Wage Subsidy): 256 firms
Group 6 (Credit): 512 firms

Power calculations were conducted for the main outcomes on both the worker and firm side of the experiment. For details, please refer to Table 1 in the Supporting Documents and Materials section.