Jobs are hard to find in Africa. Searching for jobs in African labour markets is expensive and time consuming. Job seekers, the young unemployed in particular, find it hard to be selected for the available positions. As a result, new employment opportunities are often not shared equally.
Many economies in sub-Saharan Africa have achieved high and sustained growth in the last decade. However, economic expansion has rarely been followed by marked improvements in the labour market outcomes of the poor. There is growing awareness that difficulties in finding jobs may be preventing economic growth from being truly pro-poor in urban settings. Policy makers have taken a keen interest in these issues, as evidenced in the targets for the development of job information services and job seeker assistance programmes set in 2010 by the Government of Ethiopia. However, insufficient descriptive data on the ways in which people look for jobs, and a lack of rigorous evaluation of job search assistance programmes in the sub-Saharan African context are limiting the use of these new policy tools.
We run a novel Randomised Control Trial (RCT) to evaluate two different policies to improve the labour market outcomes of young prospective workers: (i) the provision of transport vouchers for those seeking work; and (ii) the creation of a standardised screening service (job-application workshop). These interventions are designed to ease two major impediments that young Ethiopians face in finding work. These impediments arise because of the geographical distance between residential areas and job hubs, and because of the scarcity of means available for motivated job seekers to persuade potential employers of their worth (sometimes termed ‘asymmetric information problems’).
We evaluate these programmes using a random sample of over 4,000 young individuals in Addis Ababa, Ethiopia. Addis Ababa is an ideal place to study the costs of job search. Ethiopia has enjoyed impressive economic growth in past years; however, Addis Ababa still has large numbers of urban unemployed. The city is growing and sprawling, with many people living away from the clusters of new jobs. Transportation costs from the suburbs to the city centre are high, making frequent visits to job vacancy boards and work sites for job applications or interviews unaffordable for many. Furthermore, a large, recent expansion in tertiary education has considerably increased the skills of the workforce, at the cost of making it harder for employers to single out the best candidates.
Our results find that both interventions help jobseekers get better jobs. Eight months after the end of the programme, individuals invited to the job application workshop are nearly 40 percent more likely to have permanent employment and nearly 25 percent more likely to be in formal employment compared to those in the control group. Individuals who are offered the transport subsidy are 25 percent more likely to be in formal employment. These effects are statistically significant; they are robust to a correction for multiple comparisons; and their magnitude is economically meaningful. The effects are stronger for women and for less educated workers (those who have at most secondary education). These are the groups that typically find it hardest to obtain high quality employment, in Ethiopia and in other developing countries.
To understand the mechanisms behind these effects, we conduct fortnightly phone interviews with all sampled jobseekers throughout the course of the study. This provides a rich, high-frequency dataset that allows us to observe how search behaviour evolves in response to our interventions. We find that the transport treatment improves employment outcomes by allowing young people to search more intensely for jobs (treated individuals visit the centre of town to look for work more frequently). Moreover, both the transport subsidies and the job application workshop improve the efficacy of job search (the conversion rate of applications into offers increases).
We also find direct evidence that spatial and informational constraints matter for employment outcomes but can be overcome through job search assistance interventions.
Our results contribute to the academic literature in many ways. First, they highlight the potential of job search assistance in the growing urban labour markets of developing countries. Second, they elucidate the role of spatial and informational frictions in preventing the efficient matching of workers and firms.