Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda *

Abstract

We study a government program in Uganda designed to help the poor and unemployed become self-employed artisans. The program targeted people ages 16 to 35 in Uganda's conflict-affected north, inviting them to form groups and submit grant proposals to pay for vocational training and business start-up. Funding was randomly assigned, and treatment groups received unsupervised cash grants of $382 per member on average. The government's main aims were to increase incomes and thus also promote social stability. The treatment group invests some of the grant in skills training but most in tools and materials. After four years half practice a skilled trade. Relative to the control group, the program increases business assets by 57%, hours of work by 17%, and earnings by 38%. We see no corresponding impact, however, on individual social cohesion, participation, anti-social behavior, or protest attitudes and participation. Based on individual earnings alone we estimate 30 to 50% annual returns to investment from the program. We also see evidence that the treatment group grow their enterprises and hire labor, extending the employment impacts of the program. Impact levels are similar for treatment men and women, but are qualitatively different for women-both because women begin poorer (meaning the impact is larger relative to their starting point), and because women's enterprises and earnings stagnate without the program but take off after a grant. The patterns we observe-high rates of investment, new business start-up, and returns on investment-are consistent with able but creditconstrained young people.

Employment and rebellion in conflicted and fragile states

“…Furthermore, the program had no discernible impact on social networks, relationships with former commanders, aggression, or social integration. As in the previous studies ( [8], [9]), this study found that the program had no impact on attitudes toward the use of violence or democracy [10].…”

“…Another study provides a more recent randomized study of an employment project in Uganda [9]. The program provided vocational training and business start-up grants to randomly selected youth in a conflicted area in Uganda.…”

Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition

“…This is the case with work testing small grants of US$100 to US$200 to existing businesses (e.g., De Mel, McKenzie, and Woodruff 2008;McKenzie and Woodruff 2008;Fafchamps et al 2014;Karlan, Knight, and Udry 2015); ultra-poor programs providing grants and training to get very poor people to start businesses (e.g., Banerjee et al 2015;Bandiera et al 2017); and business training programs for microenterprises (reviewed in McKenzie and Woodruff 2014). Blattman, Fiala, and Martinez (2014) considers a program in Uganda where groups received grants of approximately US$382 per member, and finds this generates increases in skilled self-employment and in incomes for the recipients, but only minor increases in employment in these firms. Fafchamps and Quinn (forthcoming) provide grants of US$1,000 to their 39 winners.…”

Policies to support women’s paid work

“…The need for group members to make collective decisions contributed to the success of the program. After four years, the incomes of participating women were 73% greater than the incomes of the control group; for men, the differential gain was 29% [8]. This study is a rare example of a longer-term (after four years) evaluation of a government program to ease the transition from agricultural employment to artisanal activities.…”