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The Impact of Labor Intermediation and Training in High Informality Contexts. Evidence from Paraguay

Author

Listed:
  • Campos, Nicolás

    (Inter-American Development Bank)

  • Chalup, Miguel

    (Arizona State University)

  • Mitnik, Oscar A.

    (Inter-American Development Bank)

  • Urquidi, Manuel

    (Inter-American Development Bank)

Abstract

We provide quasi-experimental estimates of the impact of reforming public training programs offered in Paraguay on formal employment. The Programa de Apoyo a la Inserción Laboral (PAIL) revamped training program design in the country by offering courses aligned with the needs of the private sector, enhancing non-cognitive skills, and combining practical work within companies with classroom training. We combine administrative records—which contain detailed information on the employment history and characteristics of all formal workers in Paraguay—with an empirical strategy based on extensions of difference-in-differences models and synthetic difference-in-differences. We find that the probability of obtaining formal employment for women and men increases by 11 percentage points. Even two years after participating, the program has a lasting impact on women, an aspect not observed for men. Additionally, the program's impact is positive only in the metropolitan area of Asunción; the program is less effective in areas far from the urban center, especially for men. The observed results suggest that supply-side interventions are ineffective if no formal jobs are available for the beneficiaries.

Suggested Citation

  • Campos, Nicolás & Chalup, Miguel & Mitnik, Oscar A. & Urquidi, Manuel, 2024. "The Impact of Labor Intermediation and Training in High Informality Contexts. Evidence from Paraguay," IZA Discussion Papers 17254, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17254
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    References listed on IDEAS

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    1. Verónica Escudero & Jochen Kluve & Elva López Mourelo & Clemente Pignatti, 2019. "Active Labour Market Programmes in Latin America and the Caribbean: Evidence from a Meta-Analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 55(12), pages 2644-2661, December.
    2. Simon Freyaldenhoven & Christian Hansen & Jorge Perez Perez & Jesse Shapiro, 2021. "Visualization, Identification, and stimation in the Linear Panel Event-Study Design," Working Papers 21-44, Federal Reserve Bank of Philadelphia.
    3. Eliana Carranza & David McKenzie, 2024. "Job Training and Job Search Assistance Policies in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 38(1), pages 221-244, Winter.
    4. Douglas L. Miller, 2023. "An Introductory Guide to Event Study Models," Journal of Economic Perspectives, American Economic Association, vol. 37(2), pages 203-230, Spring.
    5. Ashesh Rambachan & Jonathan Roth, 2023. "A More Credible Approach to Parallel Trends," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2555-2591.
    6. Heckman, James J. & Kautz, Tim, 2012. "Hard evidence on soft skills," Labour Economics, Elsevier, vol. 19(4), pages 451-464.
    7. David Card & Jochen Kluve & Andrea Weber, 2018. "What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 894-931.
    8. Jonathan Roth, 2022. "Pretest with Caution: Event-Study Estimates after Testing for Parallel Trends," American Economic Review: Insights, American Economic Association, vol. 4(3), pages 305-322, September.
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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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