Latin America and Caribbean

  • How Can Job Opportunities for Young People in Latin America be Improved?

    Gonzalez-Velosa et al (2012)

    Original Abstract:

    Job training programs for vulnerable youth are the main response of Latin American governments to address the problem of inadequate employment opportunities for young people. Despite its importance, knowledge about these programs is scarce. This study contributes to filling this gap in the literature by presenting new evidence on the effectiveness of six of these programs operating or that were implemented in Colombia, Honduras, Mexico, Panama, Peru and Dominican Republic. This analysis uses the results of impact evaluations of these programs and the results of qualitative surveys of young participants and employers, and in-depth interviews to training centers, employers and policy makers. The main results confirm the limited evidence available, namely, that these programs have little impact on the probability of getting a job (although there is a high heterogeneity in these impacts), but a significant impact on job quality. From this analysis, we propose a research agenda to improve knowledge on the functioning and impact of these programs, and provide a series of recommendations to improve the design and increase the effectiveness of youth training programs.

    Intervention settings: Mixed

    Intervention description: Vocational classroom and on-the-job training and job placement.

    Methodology: RCT

    Sample: Youth and adults. Offered to men and women 16-29 years old from lower socioeconomic strata, and those meeting educational and skill requirements of participating firms.

    Findings: 7%-12% increase in employment for women only. Three to seven hours per week increase in weekly hours worked for women only. Especially successful in countries with established private vocational training industry, significant wage employment and high female mobility.

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  • Life Skills, Employability and Training for Disadvantaged Youth: Evidence from a Randomized Evaluation Design

    Ibarraran et al (2012)

    Original Abstract:

    This paper presents an impact evaluation of a revamped version of the Dominican youth training program Juventud y Empleo. The paper analyzes the impact of the program on traditional labor market outcomes and on outcomes related to youth behavior and life style, expectations about the future and socio-emotional skills. In terms of labor market outcomes, the program has a positive impact on job formality for men of about 17 percent and there is also a seven percent increase in monthly earnings among those employed. However, there are no overall impacts on employment rates. Regarding non-labor market outcomes, the program reduces teenage pregnancy by five percentage points in the treatment group (about 45 percent), which is consistent with an overall increase in youth expectations about the future. The program also has a positive impact on non-cognitive skills as measured by three different scales. Scores improve between 0.08 and 0.16 standard deviations with the program. Although recent progress noted in the literature suggests that socio-emotional skills increase employability and quality of employment, the practical significance of the impacts is unclear, as there is only weak evidence that the life skills measures used are associated to better labor market performance. This is an area of growing interest and relevance that requires further research.

    Intervention settings: Mixed

    Intervention description: Vocational classroom and on-the-job training and job placement.

    Methodology: RCT

    Sample: Youth and adults. Offered to men and women 16-29 years old from lower socioeconomic strata, and those meeting educational and skill requirements of participating firms.

    Findings: 7%-12% increase in employment for women only. Three to seven hours per week increase in weekly hours worked for women only. Especially successful in countries with established private vocational training industry, significant wage employment and high female mobility.

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  • The Impact of Training Policies in Latin America and the Caribbean: The Case of Programa Joven

    Aedo and Nunez (2004)

    Original Abstract:

    This research evaluates the "Programa Joven", a training program conducted by the Ministerio del Trabajo of Argentina. We adapt and apply a non-experimental evaluation methodology to answer the following questions: Does "Programa Joven" increase the labor income of the trainees? Does "Programa Joven" increase the probability of being employed? And (3) what is the rate of return to dollars spent on the "Programa Joven"? We used Propensity Scores Matching Estimators as our basic methodology to obtain a measure of the impact of the training program. Our choice of this methodological approach was based upon both the theoretical developments in the area of Program Evaluation and the availability of relevant information. We used three different set of data to estimate the Propensity Scores which allowed us to analyze the question on how sensitive Program impact estimates are to different propensity score specifications? This question has not been addressed by the previous literature. Our results indicate first, that Program impact on earnings were statistically significant for young males and adult females. This result was not sensitive to the number of nearest neighbors. Second, the estimated Program impact on employment was statistically significant for adult females only. Again the result was not sensitive to the number of nearest neighbors. Third, impact estimates on earnings and employment for the groups with statistically significant results were not sensitive to the different sources of information used to estimate the propensity scores. This was a surprising result as we expected to observe greater variability in the impact results across different propensity score specifications. Fourth, the cost-benefit exercise conducted suggest that we required at least 9 years of duration of the earnings impact for the Program to have a positive net present value for the groups with statistically significant results.

    Intervention settings: Rural and urban (across 11 regions)

    Intervention description: Provides an average of 200 hours of training over 14-20 weeks (classroom followed by internship), a monetary subsidy for females with children, transportation expenses, medical checkups, books, materials and work clothing.

    Methodology: Cross-sectional propensity score matching using program beneficiaries and eligible non-participants.

    Sample: Young people from poor households with low education levels and little work experience, who were unemployed or inactive.

    Findings: Positive employment impacts for women of 6% at 12 months, and 15% at 18 months. Beneficiary women generate 93% more labor income than their control counterparts. Decrease in measures of occupational segregation. Negative employment impacts for men.

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  • Medium and Long Run Effects of Nutrition and Child Care: Evaluation of a Community Nursery Programme in Rural Colombia

    Attanasio and Vera-Hernandez (2004)

    Original Abstract:

    In this paper we evaluate the effect of a large nutrition programme in rural Colombia on children nutritional status, school achievement and female labour supply. We find that the programme has very large and positive impacts. Dealing with the endogeneity of treatment is crucial, as the poorest children tend to select into the programme. Methods like Propensity Score Matching would even yield negative estimates of the impact of the program. Our results are robust to the use of instruments that do not depend on individual household choices. We also validate our evaluation strategy by considering the effect of the program on pre-intervention variables. Further, we explore the heterogeneity of the impact of the programme. Children from the poorest backgrounds are the ones that benefit the most.

    Intervention settings: Rural.

    Intervention description: Community nurseries where poor children receive food (purchased by government) and chid care from one of the mothers in the community.

    Methodology: Instrumental variables using distance to nearest center as an instrument.

    Sample: Poor households, based on an eligibility score.

    Findings: Increase in probability of women's employment (0.12 to 0.37) and hours worked (by 75/month.) Positive impact on children's height and grades.

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  • Subsidizing Vocational Training for Disadvantaged Youth in Developing Countries: Evidence from a Randomized Trial

    Attanasio et al (2011)

    Original Abstract:

    This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005. This randomized trial offers a unique opportunity to examine the impact of training in developing countries. We use originally collected data on individuals randomly offered and not offered training. The program raises earnings and employment, especially for women. Women offered training earn 18% more and have a 0.05 higher probability of employment than those not offered training, mainly in formal sector jobs. Cost- benefit analysis of these results suggests that the program generates much larger net gains than those found in developed countries.

    Intervention settings: Urban

    Intervention description: Three months in-classroom training and three months of on-the-job training. Courses provided vocational skills in a diverse number of occupations (including taxi and bus drivers, office assistants, call center operators, medical assistants, textile operators, carpentry assistants, etc.) On-the-job training was provided by legally registered (formal sector) companies, via unpaid internships. Trainees received a daily stipend of $2.20 ($3 for women with children under 7).

    Methodology: RCT

    Sample: Unemployed young people placed in lowest two deciles of income distribution.

    Findings: 11% increase in likelihood to be in paid employment. Wage and salary earnings increase by 18%. Controlling for training institution fixed effects and pre-treatment characteristics: Female trainees' probability of paid employment 19-21 months after program increased by 5% relative to the control group. Women worked an average of 1.1 more days/month and 2.5 more hours/week than women in the control group and earned 18% more than women who didn't receive the training. Impact on total labor income not reported.

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  • Creating incentives to save among microfinance borrowers: a behavioral experiment from Guatemala

    Atkinson, de Janvry, McIntosh and Sadoulet (2010)

    Original Abstract:

    We report on an experiment in which a new set of commercial savings products, informed by the behavioral finance literature, were offered to the microfinance borrowers of Guatemala's largest public-sector bank. We find that prompting savings at the time of loan repayment leads savings deposits to double relative to the control, and framing a contribution of 10% of the loan payment causes them to double again. Loan repayment and savings accumulation appear to be complementary. Mainstreaming the most successful product tested here would allow the bank to realize savings sufficient to leverage 50% of the short-term loan portfolio.

    Intervention settings: N/A (locations unspecified).

    Intervention description: New commercial savings products, with no financial incentives or penalties, were offered to existing borrowers.

    Methodology: RCT.

    Sample: 1,375 borrowers from 20 microfinance branches of Guatemala's largest public sector bank.

    Findings: Prompting for savings at the time of loan payments doubles savings, while suggesting a savings deposit equal to 10% of the loan repayment causes savings to double again. Women are significantly more likely to take up the offer of a savings account. However, women's accumulated net savings are significantly lower overall.

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  • Improving the Design of Conditional Transfer Programs: Evidence from a Randomized Education Experiment in Colombia

    Barrera-Osorio, Bertrand, Linden and Perez-Calle (2011)

    Original Abstract:

    Using a student level randomization, we compare three education-based conditional cash transfers designs: a standard design, a design where part of the monthly transfers are postponed until children have to re-enroll in school, and a design that lowers the reward for attendance but incentivizes graduation and tertiary enrollment. The two nonstandard designs significantly increase enrollment rates at both the secondary and tertiary levels while delivering the same attendance gains as the standard design. Postponing some of the attendance transfers to the time of re-enrollment appears particularly effective for the most at-risk children.

    Intervention settings: Urban: Bogota

    Intervention description: Comparison of three education-based conditional cash transfers: standard design; postponing part of monthly transfers until students re-enroll in school; and reduced rewards for attendance with incentives to graduate and enroll in a tertiary institution.

    Methodology: RCT

    Sample: 7,569 students in 68 schools.

    Findings: Both non-standard variants increase enrollment rates at the secondary and tertiary levels without reducing attendance.

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  • Schooling Impacts of Conditional Cash Transfers on Young Children: Evidence from Mexico

    Berhman, Parker and Todd (2011)

    Original Abstract:

    This paper evaluates impacts of Oportunidades, a Mexican conditional cash transfer program, on educational outcomes 5.5 years after program initiation for a group of children who were age 0 to 8 years pre-program. The oldest children within this age range received educational scholarships. The youngest children did not receive the scholarships because they had not yet started the third grade of school (the initial grade for scholarships), but were beneficiaries of the program's health components that included nutritional supplements for children 24 months of age or younger. All of these children also may have benefitted more generally from increased household income resulting from the program. This paper investigates how the program differentially affected younger and older children within this age range and examines whether the early nutritional intervention led to improvements in subsequent educational performance. The program impact estimates are derived from a randomly assigned treatment and control group, which participated for different lengths of time in the program, and from a matched comparison group that had not participated prior to the collection of data in 2003. The empirical findings show positive program impacts on reducing ages at entering school for the younger children as well as on accumulated grades of schooling after 5.5 years of benefits for older children, with estimates implying a 1 percent reduction in the age of entry to primary and an increase in grades of schooling completed to date of about 8 to 9 percent.

    Intervention settings: Rural areas in 7 states

    Intervention description: Conditional cash transfers under PROGRESA provided to children in 320 randomly selected communities for 1.5 years, after which they were also provided to children in the 186 control communities.

    Methodology: RCT (with estimates of longer-term exposure obtained using a matched comparison group).

    Sample: 14,485 children aged 9-15 in 1997 (and 12,457 from 15-21 in 2003) from 506 communities.

    Findings: Estimated impact of 1.5 years longer exposure to the program (i.e., 5.5 years versus 4 years) is 2.4% for boys and 2.7% for girls (and 4.4% for boys and 6.8% for girls who had completed 7 or more grades pre-program). Estimates of the impact of 5.5 years of exposure to the program, obtained by using data from a matched comparison group from 152 additional communities, indicate that completed years of schooling increased by 12-15% among boys and 9-10% among girls, depending on the age group.

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  • The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

    Bruhn, Karlan, and Schoar (2012)

    Original Abstract:

    We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a control group that did not receive any subsidized training. Treatment enterprises were matched with one of nine local consulting firms and met with their consultants once a week for four hours over a one year period. Results from a follow_up survey, conducted after the intervention, show that the consulting services had a large impact on the performance of the enterprises in the treatment group: monthly sales went up by about 80 percent; similarly, profits and productivity increased by 120 percent compared to the control group. We also see a significant increase in the entrepreneurial spirit index for the treatment group, a set of questions designed to illicit the SME owners' confidence in their ability to manage their business and deal with any future difficulties. However, we do not find any significant increase in the number of workers employed in the treatment group.

    Intervention settings: Urban.

    Intervention description: Consulting services.

    Methodology: RCT.

    Sample: 432 small and medium enterprises (30% women decision-makers) with average of 14 full-time employees. Firms existed on average 10 years.

    Findings: Increase in monthly sales by 80%. Profits and productivity increase by 120%. Significant increase in entrepreneurial spirit index (confidence in ability to manage business and deal with future difficulties). No signficant increase in number of workers employed.

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  • Business Literacy and Development: Evidence from a Randomized Trial in Rural Mexico

    Calderon, Cunha, and de Giorgi (2012)

    Original Abstract:

    This paper investigates the effectiveness of basic business training for female entrepreneurs in rural Mexico. Through a Randomized Controlled Trial and panel data on a representative sample of female entrepreneurs, we estimate positive effects of basic applied business training on profits, revenues and number of clients served. At the same time we find a positive effect on the use of "formal" accounting techniques. These effects are estimated in the short-run, about seven months after the end of the business classes, the only treatment offered to our sample of female entrepreneurs.

    Intervention settings: Rural.

    Intervention description: 6 weeks of business literacy classes with two four-hour meetings per week. Total of 48 hours.

    Methodology: RCT.

    Sample: 875 female entrepreneurs (724 in follow-up) of small firms in poor state in Mexico; majority of sample with below secondary education.

    Findings: 24% increase in profits and 20% increase in revenues. 50% of non-attriting businesses had closed by the time of second follow-up survey 28 months after training.

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