Information frictions in the labor market: Evidence from a field experiment in Uganda

We study how a lack of information on the skills of workers affects both employers and job seekers. To do so, we design and implement a field experiment in the Ugandan labour market: through the provision of certifications, we vary whether new information on the soft skills of workers is disclosed t...

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Detalhes bibliográficos
Principais autores:	Bass, Vittorio, Nansamba, Aisha
Formato:	Working Paper
Idioma:	en_US
Publicado em:	Growth and Labour Markets in Low Income Countries Program 2022
Assuntos:	Field experiment Information frictions Job matching Recruitment Signalling Small firms Soft skills Uganda Youth employment
Acesso em linha:	http://hdl.handle.net/10361/15875

id	10361-15875
record_format	dspace
spelling	10361-158752022-01-12T21:01:27Z Information frictions in the labor market: Evidence from a field experiment in Uganda Bass, Vittorio Nansamba, Aisha Field experiment Information frictions Job matching Recruitment Signalling Small firms Soft skills Uganda Youth employment We study how a lack of information on the skills of workers affects both employers and job seekers. To do so, we design and implement a field experiment in the Ugandan labour market: through the provision of certifications, we vary whether new information on the soft skills of workers is disclosed to both managers and workers during job interviews. We show that both sides of the market react to the information: managers of higher ability update their beliefs on worker’s skills, while workers with higher skills revise their outside options upwards. Guided by these facts, we develop a screening model with two-sided updating. The model predicts non-linear impacts of the certifications on job offers and hires along with the skill distribution, due to differential effects on worker’s outside options. In line with these predictions, we find the largest employment gains for workers in the middle of the skill distribution. Our estimates of the Internal Rate of Return (IRR) of the intervention range between 9-29%, implying positive welfare gains for the average participant. Motivated by the heterogeneous impacts, we use the model to determine the welfare effects of introducing a mandatory certification policy on soft skills across the entire skill distribution. 2022-01-12T06:56:21Z 2022-01-12T06:56:21Z 2017 2017-04 Working Paper http://hdl.handle.net/10361/15875 en_US https://bigd.bracu.ac.bd/publications/information-frictions-in-the-labor-market-evidence-from-a-field-experiment-in-uganda/ application/pdf Growth and Labour Markets in Low Income Countries Program
institution	Brac University
collection	Institutional Repository
language	en_US
topic	Field experiment Information frictions Job matching Recruitment Signalling Small firms Soft skills Uganda Youth employment
spellingShingle	Field experiment Information frictions Job matching Recruitment Signalling Small firms Soft skills Uganda Youth employment Bass, Vittorio Nansamba, Aisha Information frictions in the labor market: Evidence from a field experiment in Uganda
description	We study how a lack of information on the skills of workers affects both employers and job seekers. To do so, we design and implement a field experiment in the Ugandan labour market: through the provision of certifications, we vary whether new information on the soft skills of workers is disclosed to both managers and workers during job interviews. We show that both sides of the market react to the information: managers of higher ability update their beliefs on worker’s skills, while workers with higher skills revise their outside options upwards. Guided by these facts, we develop a screening model with two-sided updating. The model predicts non-linear impacts of the certifications on job offers and hires along with the skill distribution, due to differential effects on worker’s outside options. In line with these predictions, we find the largest employment gains for workers in the middle of the skill distribution. Our estimates of the Internal Rate of Return (IRR) of the intervention range between 9-29%, implying positive welfare gains for the average participant. Motivated by the heterogeneous impacts, we use the model to determine the welfare effects of introducing a mandatory certification policy on soft skills across the entire skill distribution.
format	Working Paper
author	Bass, Vittorio Nansamba, Aisha
author_facet	Bass, Vittorio Nansamba, Aisha
author_sort	Bass, Vittorio
title	Information frictions in the labor market: Evidence from a field experiment in Uganda
title_short	Information frictions in the labor market: Evidence from a field experiment in Uganda
title_full	Information frictions in the labor market: Evidence from a field experiment in Uganda
title_fullStr	Information frictions in the labor market: Evidence from a field experiment in Uganda
title_full_unstemmed	Information frictions in the labor market: Evidence from a field experiment in Uganda
title_sort	information frictions in the labor market: evidence from a field experiment in uganda
publisher	Growth and Labour Markets in Low Income Countries Program
publishDate	2022
url	http://hdl.handle.net/10361/15875
work_keys_str_mv	AT bassvittorio informationfrictionsinthelabormarketevidencefromafieldexperimentinuganda AT nansambaaisha informationfrictionsinthelabormarketevidencefromafieldexperimentinuganda
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Information frictions in the labor market: Evidence from a field experiment in Uganda

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