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Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda

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Author Info

  • Christopher Blattman

    ()
    (Yale University, Departments of Political Science & Economics)

  • Nathan Fiala

    ()
    (German Institute for Economic Research)

  • Sebastian Martinez

    ()
    (Inter American Development Bank, Office of Strategic Planning and Development Effectiveness)

Abstract

Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda’s largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs. Mid-term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of nonhousehold employment double and cash earnings increase by nearly 50% relative to the control group. We estimate the transfer yields a real annual return on capital of 35% on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is unexplained, however, and is unrelated to conventional economic measures of ability, suggesting we have much to learn about the determinants of entrepreneurship. Finally, these economic gains result in modest improvements in social stability. Measures of social cohesion and community support improve mildly, by roughly 5 to 10%, especially among males, most likely because the youth becomes a net giver rather than a net taker in his kin and community network. Most strikingly, we see a 50% fall in interpersonal aggression and disputes among males, but a 50% increase among females. Neither change seems related to economic performance nor does social cohesion—a puzzle to be explored in the next phase of the study. These results suggest that increasing access to credit and capital could stimulate employment growth in rural Africa. In particular, unconditional and unsupervised cash transfers may be a more effective and cost-efficient form of large-scale aid than commonly believed. A second stage of data collection in 2012 will collect longitudinal economic impacts, additional data on political violence and behavior, and explore alternative theoretical mechanisms.

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Bibliographic Info

Paper provided by Households in Conflict Network in its series HiCN Working Papers with number 135.

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Length: 74 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:hic:wpaper:135

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Web page: http://www.hicn.org

Related research

Keywords: Cash grant; randomized control trial; credit constraints; psychological and social impacts;

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References

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Citations

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Cited by:
  1. Dorfman, Mark & Palacios, Robert, 2012. "World Bank support for pensions and social security," Social Protection Discussion Papers 70925, The World Bank.
  2. Macours, Karen & Premand, Patrick & Vakis, Renos, 2012. "Transfers, Diversification and Household Risk Strategies: Experimental evidence with lessons for climate change adaptation," CEPR Discussion Papers 8940, C.E.P.R. Discussion Papers.
  3. Dean Karlan & Adam Osman & Jonathan Zinman, 2013. "Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock," NBER Working Papers 19696, National Bureau of Economic Research, Inc.
  4. Cho, Yoonyoung & Kalomba, Davie & Mobarak, Ahmed Mushfiq & Orozco, Victor, 2013. "Gender differences in the effects of vocational training : constraints on women and drop-out behavior," Policy Research Working Paper Series 6545, The World Bank.
  5. Robalino, David & Margolis, David & Rother, Friederike & Newhouse, David & Lundberg, Mattias, 2013. "Youth employment : a human development agenda for the next decade," Social Protection Discussion Papers 83925, The World Bank.

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