Learning and Earning: Evidence from a Randomized Evaluation in India

This paper estimates the short-and-medium-run effects of participating in a subsidized vocational training program aimed at improving labor market outcomes of women residing in low-income households in a developing country. We combine pre-intervention data with two rounds of post-intervention data from a field experiment to quantify the short-and-medium-run effects of the program. In the short-run, we find that program participants are significantly more likely to be employed, work additional hours, and earn more. These short-run impact estimates are all sustained in the medium-run. We also identify credit constraints, local access, and lack of proper child care support as important barriers to program participation and completion. We are able to rule out two alternative mechanisms -- signalling and change in behavior that can drive these findings. Finally, a simple cost-benefit analysis suggests that the program is highly cost effective.

[1]  D. McKenzie,et al.  Returns to Capital in Microenterprises: Evidence from a Field Experiment , 2007, SSRN Electronic Journal.

[2]  Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment , 2011 .

[3]  Ragan Petrie,et al.  On the Preferences of Principals and Agents , 2007 .

[4]  Sean Becketti,et al.  The Panel Study of Income Dynamics after Fourteen Years: An Evaluation , 1988, Journal of Labor Economics.

[5]  J. Heckman,et al.  The Economics and Econometrics of Active Labor Market Programs , 1999 .

[6]  P. Koellinger,et al.  "I Think I Can, I Think I Can": Overconfidence and Entrepreneurial Behavior , 2007 .

[7]  J. List,et al.  Gender, Competitiveness, and Socialization at a Young Age: Evidence From a Matrilineal and a Patriarchal Society , 2013, Review of Economics and Statistics.

[8]  J. List,et al.  Gender Differences in Competition: Evidence from a Matrilineal and a Patriarchal Society , 2008 .

[9]  Jesse M. Shapiro,et al.  Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia , 2010 .

[10]  G. Harrison,et al.  Field experiments , 1924, The Journal of Agricultural Science.

[11]  D. McKenzie,et al.  The Impact of Vocational Training for the Unemployed: Experimental Evidence from Turkey , 2014, SSRN Electronic Journal.

[12]  M. Kremer,et al.  Vocational education voucher delivery and labor market returns: a randomized evaluation among Kenyan youth , 2013 .

[13]  Andreas Blom,et al.  Employability and Skill Set of Newly Graduated Engineers in India , 2011 .

[14]  G. Betcherman,et al.  Impacts of active labor market programs: new evidence from evaluations with particular attention to developing and transition countries , 2004 .

[15]  A. Banerjee,et al.  The Miracle of Microfinance? Evidence from a Randomized Evaluation , 2013 .

[16]  Dean S. Karlan,et al.  Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts , 2007 .

[17]  Jacob Alex Klerman,et al.  NBER WORKING PAPER SERIES EVALUATING THE DIFFERENTIAL EFFECTS OF ALTERNATIVE WELFARE-TO-WORK TRAINING COMPONENTS: A RE-ANALYSIS OF THE CALIFORNIA GAIN PROGRAM , 2022 .

[18]  N. Fiala,et al.  Can employment programs reduce poverty and social instability? Experimental evidence from a Ugandan aid program , 2012 .

[19]  Ernst Fehr,et al.  Do Workers Work More if Wages are High? Evidence from a Randomized Field Experiment , 2007 .

[20]  A. Bommier,et al.  Education Demand and Age at School Enrollment in Tanzania. , 2000 .

[21]  R. Pande,et al.  Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India , 2010 .

[22]  David S. Lee.  Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects , 2009 .

[23]  M. Kremer,et al.  Bureau for Research and Economic Analysis of Development Estimating the Impact of the Hajj: Religion and Tolerance in Islam’s Global Gathering , 2008 .

[24]  Yoonyoung Cho,et al.  Gender Differences in the Effects of Vocational Training: Constraints on Women and Drop-Out Behavior , 2013, SSRN Electronic Journal.

[25]  Victor Lavy.  School supply constraints and children's educational outcomes in rural Ghana☆ , 1996 .

[26]  Mark R. Rosenzweig,et al.  Traditional Institutions Meet the Modern World: Caste, Gender and Schooling Choice in a Globalizing Economy , 2003 .

[27]  Aysit Tansel.  Determinants of school attainment of boys and girls in Turkey: individual, household and community factors , 2002 .

[28]  Elaine M. Liu.  Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China , 2013, Review of Economics and Statistics.

[29]  David Card,et al.  Measuring the Effect of Subsidized Training Programs on Movements in Andout of Employment , 1987 .

[30]  David Card,et al.  The Labor Market Impacts of Youth Training in the Dominican Republic , 2011, Journal of Labor Economics.

[31]  D. McKenzie,et al.  Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns , 2008, SSRN Electronic Journal.

[32]  T. Vishwanath,et al.  Soft Skills or Hard Cash? The Impact of Training and Wage Subsidy Programs on Female Youth Employment in Jordan , 2012 .

[33]  O. Ashenfelter,et al.  Estimating the Effect of Training Programs on Earnings , 1976 .

[34]  Bruno Biais,et al.  Judgmental Overconfidence, Self-Monitoring and Trading Performance in an Experimental Financial Market , 2005 .

[35]  Elizabeth M. King,et al.  Education policy and schooling attainment in Malaysia and the Philippines , 1987 .

[36]  G. Moscarini,et al.  Morale Hazard , 2003 .

[37]  Dean S. Karlan,et al.  Using Experimental Economics to Measure Social Capital and Predict Financial Decisions , 2005 .

[38]  D. Raffe,et al.  Vocational Education and Training: Issues for a Thematic Review , 2006 .

[39]  Orley Ashenfelter,et al.  Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs , 1984 .

[40]  Jeffrey A. Smith,et al.  Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators? , 2000 .

[41]  David Card,et al.  Active Labor Market Policies in Europe: Performance and Perspectives , 2007 .

[42]  M. Spence.  Job Market Signaling , 1973 .

[43]  Jessica Holmes.  Measuring the Determinants of School Completion in Pakistan: Analysis of Censoring and Selection Bias. Center Discussion Paper. , 2003 .

[44]  Francine D. Blau,et al.  Handbook of Labor Economics , 1999 .

[45]  Christopher Woodruff,et al.  What are We Learning from Business Training and Entrepreneurship Evaluations Around the Developing World? , 2012, SSRN Electronic Journal.

[46]  M. Fafchamps,et al.  Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana , 2014 .

[47]  R. Lalonde.  Evaluating the Econometric Evaluations of Training Programs with Experimental Data , 1984 .

[48]  Utteeyo Dasgupta,et al.  Selection into skill accumulation: evidence using observational and experimental data , 2011 .

[49]  Siwan Anderson,et al.  The Economics of Roscas and Intra-Household Resource Allocation , 2000 .

[50]  Jochen Kluve.  The Effectiveness of European Active Labor Market Policy , 2006, SSRN Electronic Journal.

[51]  Christopher Blattman,et al.  Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda , 2013 .

[52]  Markus Goldstein,et al.  Women's Empowerment in Action: Evidence from a Randomized Control Trial in Africa Update from 2012 paper: Empowering Adolescent Girls: Evidence from a Randomized Control Trial in Uganda , 2014 .

[53]  Paul Gregg,et al.  The impact of youth unemployment on adult unemployment in the NCDS , 2001 .

[54]  Costas Meghir,et al.  Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized Trial , 2011 .

[55]  Pablo Ibarrarán,et al.  Evaluating the impact of job training programmes in Latin America: evidence from IDB funded operations , 2009 .

[56]  Dean S. Karlan,et al.  Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions , 2006, Review of Economics and Statistics.

[57]  W. Narendranathan,et al.  Influences of Past History on the Incidence of Youth Unemployment: Empirical Findings for the UK , 2009 .

[58]  K. Macours,et al.  Transfers, Diversification and Household Risk Strategies: Experimental Evidence with Lessons for Climate Change Adaptation , 2012 .