G²LM|LIC

Understanding specific barriers to job search and returns to relaxing these barriers is important for economists and policymakers. An experiment that changes the default process for initiating job applications increases applications by 600% on a search platform in Pakistan. Perhaps surprisingly, the marginal treatment-induced applications have approximately constant rather than decreasing returns. These results are consistent with a directed search model in which some jobseekers miss some high-return vacancies due to psychological costs of initiating applications. These findings show that small reductions in search costs can substantially improve search outcomes in environments with some relatively inactive jobseekers.

We designed and randomized a mentorship program among students undergoing school-to-work transitions in Uganda. The program improved participants’ career trajectories up to a year after graduation. Using call transcripts and survey data, we find that the mentorship acted by providing information about entry-level jobs and encouragement, rather than job referrals or search capital. Consistent with this finding, mentored students lowered their reservation wages, raised their expected returns to experience, and turned down fewer job offers. These results highlight the role of distorted beliefs in prolonging youth unemployment and point to a cost-effective and scalable solution.

In Nigeria, informality has been on a persistent rise with an increasing number of people engaging in informal employment. Similarly, the rate of poverty and extreme poverty in the country has also been on the rise, an occurrence more evident among the working poor. However, not much is known empirically about the dynamics of both informality and poverty within the Nigerian context. Using panel data from the four waves of the Nigeria General Household Survey (GHS), this study employs the random effects panel regression model to assess the poverty implications of mobility across informal employment types, while also exploring the dynamics of informality and poverty, respectively. The results of our analysis indicate that although work is important, the quality of the work is much more crucial for the welfare of those engaged. Specifically, we find that whereas, transition between all forms of employment is negatively associated with poverty, household heads who transition from formal to informal employment are 0.8 times less likely to move above the poverty line than those who remain in formal employment. Our findings also show that persistence in informality in the country is more evident among own-account workers.