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

76 Pages Posted: 1 Apr 2012 Last revised: 24 May 2013

See all articles by Christopher Blattman

Christopher Blattman

University of Chicago, Harris School of Public Policy; National Bureau of Economic Research (NBER)

Nathan Fiala

University of Connecticut - Department of Agricultural and Resource Economics

Sebastian Martinez

Inter-American Development Bank (IDB)

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2012

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 non-household 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.

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

JEL Classification: O12, O15

Suggested Citation

Blattman, Christopher and Fiala, Nathan and Martinez, Sebastian, Employment Generation in Rural Africa: Mid-Term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda (March 1, 2012). DIW Berlin Discussion Paper No. 1201. Available at SSRN: https://ssrn.com/abstract=2030866 or http://dx.doi.org/10.2139/ssrn.2030866

Christopher Blattman (Contact Author)

University of Chicago, Harris School of Public Policy ( email )

1101 East 58th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nathan Fiala

University of Connecticut - Department of Agricultural and Resource Economics ( email )

Sebastian Martinez

Inter-American Development Bank (IDB) ( email )

1300 New York Ave
Washington, DC 20011
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
422
rank
230,999
Abstract Views
2,238
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information