Working Paper: NBER ID: w13931
Authors: Orazio Attanasio; Adriana Kugler; Costas Meghir
Abstract: Youth unemployment in Latin America is exceptionally high, as much as 50% among the poor. Vocational training may be the best chance to help unemployed young people at the bottom of the income distribution. This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005 on the employment and earnings of trainees. This is one of a couple of randomized training trials conducted in developing countries and, thus, offers a unique opportunity to examine the causal impact of training in a developing country context. We use originally collected data on individuals randomly offered and not offered training. We find that the program raises earnings and employment for both men and women, with larger effects on women. Women offered training earn about 18% more than those not offered training, while men offered training earn about 8% more than men not offered training. Much of the earnings increases for both men and women are related to increased employment in formal sector jobs following training. The benefits of training are greater when individuals spend more time doing on-the-job training, while hours of training in the classroom have no impact on the returns to training. Cost-benefit analysis of these results suggests that the program generates a large net gain, especially for women.
Keywords: youth unemployment; vocational training; randomized trial; Colombia; labor market outcomes
JEL Codes: C21; I38; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Being offered training (M53) | Employment rates for women (J21) |
| Being offered training (M53) | Employment rates for men (J79) |
| Being offered training (M53) | Earnings for women (J31) |
| Being offered training (M53) | Earnings for men (J31) |
| Enhancements in earnings (J31) | Increased employment in formal sector jobs (J68) |
| On-the-job training (M53) | Better outcomes (I14) |
| Longer internships (M53) | Higher employment and earnings gains (J39) |
| Classroom training alone (A29) | Similar benefits (J32) |