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Are Small Firms Labor Constrained? Experimental Evidence from Ghana

Author

Listed:
  • Morgan Hardy
  • Jamie McCasland

Abstract

We report the results of a field experiment that randomly placed unemployed young people as apprentices with small firms in Ghana and included no cash subsidy to firms (or workers) beyond in-kind recruitment services. Treated firms experienced increases in firm size of approximately half a worker and firm profits of approximately 10 percent for each apprentice placement offered, documenting frictions to novice hiring. We interpret the program as providing a novel worker screening technology to firms, as (voluntary) worker participation included nonmonetary application costs, echoing the widespread use of an entrance fee mechanism for hiring apprentices in the existing labor market.

Suggested Citation

  • Morgan Hardy & Jamie McCasland, 2023. "Are Small Firms Labor Constrained? Experimental Evidence from Ghana," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 253-284, April.
    • Handle: RePEc:aea:aejapp:v:15:y:2023:i:2:p:253-84
    DOI: 10.1257/app.20200503
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    Citations

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    Cited by:

    1. Kiss, Andrea & Garlick, Robert & Orkin, Kate & Hensel, Lukas, 2023. "Jobseekers' Beliefs about Comparative Advantage and (Mis)Directed Search," IZA Discussion Papers 16522, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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