Making Entrepreneurs: Returns to Training Youth in Hard Versus Soft Business Skills

Abstract

We study the medium-term impacts of the Skills for Effective Entrepreneurship Development (SEED) program, an innovative in-residence 3-week mini-MBA program for high school students modeled after western business school curricula and adapted to the Ugandan context. The program featured two separate treatments: the hard-skills MBA features a mix of approximately 75% hard skills and 25% soft skills; the soft skills curriculum has the reverse mix. Using data on 4400 youth from a nationally representative sample in a 3-arm field experiment in Uganda, the 3.5 year follow-up demonstrated that training was effective in improving both hard and soft skills, but only soft skills were directly linked to improvements in self-efficacy, persuasion, and negotiation. The skill upgrade was rewarded in substantially higher earnings; 32.1% and 29.8% increases in earnings for those who attended hard-and soft-training, respectively, most of which, was generated through self-employment. Furthermore, youth in both groups were more likely to start enterprises and more successful in ensuring their businesses' survival. The program led to significantly larger profits (24.2% and 27.2% for hard-and soft-treatment arms respectively) and larger business capital investments (38.4% and 32.6% for SEED hard and SEED soft, respectively). Both SEED curricula were very cost-effective; two months worth of the extra earnings caused by the training alone would exceed the cost of the program. These benefits abstract from the job-and business-creation benefits of the program, which were substantial: relative to the control group, SEED entrepreneurs created 985 additional jobs and 550 new businesses.

Readiness of Graduates from Ugandan Higher Institutions of Learning for Work in the Fourth Industrial Revolution

“…Regular curriculum updates and incorporation of emerging technologies, as recommended by Penprase (2018), are becoming increasingly common. Several studies have confirmed the high demand for soft skills among employers in Uganda, as well as their positive impact on productivity and innovation (Chioda et al, 2021;Gathani et al, 2019;Nampewo et al, 2018). The impact of strong soft skills extends beyond mere employment.…”

What has been driving work-to-work transitions in the emerging world?

“…20 Chioda and Carney (2021) show that certain socioemotional skills (i.e., negotiation, persuasion and self-efficacy) led to higher business earnings than hard skills in an impact evaluation of a business skills program in Uganda.…”

“…Finally, an emerging body of evidence (Adhvaryu and Nyshadham, forthcoming;Dimitriadis and Koning, 2022;Chioda and Carney, 2021) highlights the importance of skills for labour market outcomes in LMIC and identifies the relationship of various types of skills and transitions to better jobs as avenues for future empirical research (Bennett et al, 2022;Deming, 2022). We thus investigate the possible relationship between transitioning and skills by including cognitive skills measures in our main estimation.…”