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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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  • Christopher Blattman
  • Nathan Fiala
  • Sebastian Martinez

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.

Suggested Citation

  • Christopher Blattman & Nathan Fiala & Sebastian Martinez, 2012. "Employment Generation in Rural Africa: Mid-Term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda," Discussion Papers of DIW Berlin 1201, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1201
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    Cited by:

    1. Eichhorst, Werner & Rinne, Ulf, 2015. "Report No. 67: An Assessment of the Youth Employment Inventory and Implications for Germany's Development Policy," IZA Research Reports 67, Institute for the Study of Labor (IZA).
    2. Cho, Yoon Y. & Kalomba, Davie & Mobarak, A. Mushfiq & Orozco, Victor, 2013. "Gender Differences in the Effects of Vocational Training: Constraints on Women and Drop-Out Behavior," IZA Discussion Papers 7408, Institute for the Study of Labor (IZA).
    3. Pablo Lavado & Jamele Rigolini & Gustavo Yamada, 2015. "Giving Peru a productivity boost : towards a system of continuous education and training," Working Papers 15-16, Centro de Investigación, Universidad del Pacífico.
    4. Karlan, Dean S. & Osman, Adam & Zinman, Jonathan, 2013. "Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock," CEPR Discussion Papers 9773, C.E.P.R. Discussion Papers.
    5. Karlan, Dean & Osman, Adam & Zinman, Jonathan, 2016. "Follow the money not the cash: Comparing methods for identifying consumption and investment responses to a liquidity shock," Journal of Development Economics, Elsevier, vol. 121(C), pages 11-23.
    6. Cho, Yoonyoung. & Kalomba, Davie. & Mobarak, Ahmed Mushfiq. & Orozco, Victor., 2015. "Differences in the effects of vocational training on men and women : constraints on women and drop-out behaviour," ILO Working Papers 994874103402676, International Labour Organization.
    7. 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.
    8. World Bank Group, 2014. "Strategic Framework for Mainstreaming Citizen Engagement in World Bank Group Operations," World Bank Publications, The World Bank, number 21113, April.
    9. Robalino, David A. & Weber, Michael, 2013. "Designing and implementing unemployment benefit systems in middle and low income countries : key choices between insurance and savings accounts," Social Protection and Labor Policy and Technical Notes 90348, The World Bank.
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    12. Andrews, Colin & Kryeziu, Adea & Seo, Dahye, 2014. "World Bank support for social safety nets 2007-2013 : a review of financing, knowledge services, and results," Social Protection and Labor Policy and Technical Notes 90187, The World Bank.
    13. Cristina Cirillo & Giorgia Giovannetti, 2018. "Do Cash Transfers Trigger Investment? Evidence for Peru," Development Working Papers 433, Centro Studi Luca d'Agliano, University of Milano, revised 29 Jan 2018.
    14. Theodora-Ismene Gizelis & Nana Afua Pierre, 2013. "Gender Equality and Postconflict Reconstruction: What Do We Need to Know in Order to Make Gender Mainstreaming Work?," International Interactions, Taylor & Francis Journals, vol. 39(4), pages 601-611, September.
    15. Ana Luna & Miguel Nuñez-del-Prado & Jose Luján & Luis Mantilla García & Daniel Malca, 2017. "Alternative setup for estimating reliable frequency values in a ripple tank," Working Papers 17-01, Centro de Investigación, Universidad del Pacífico.
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    More about this item

    Keywords

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

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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