Screening and Signalling Non-Cognitive Skills: Experimental Evidence from Uganda

Abstract

We study how employers and job-seekers respond to credible information on skills that are difficult to observe, and how this affects matching in the labor market. We experimentally vary whether certificates on workers’ non-cognitive skills are disclosed to both sides of the market during job interviews between young workers and small firms in Uganda. The certificates cause workers to increase their labor market expectations, while high-ability managers revise their assessments of the workers’ skills upwards. The reaction in terms of beliefs leads to an increase in positive assortative matching and to higher earnings for workers, conditional on employment.

Signaling Specific Skills and the Labor Market of College Graduates

“…Thus, having an early experience at a job with greater training and promotion opportunities can put workers on a career path that both better uses and further develops their task-specific skills -ultimately leading to long-run earnings gains. 45 Our result is consistent with recent evidence which shows that signals on workers' skills may help firms have a more effective screening process to fill their vacancies, improving the quality of the match between workers and firms -translating in turn into long-run effects on earnings (Abebe et al, 2021;Bassi and Nansamba, 2022;Carranza et al, 2022).…”

“…This result complements the evidence from the previous literature showing that signaling skills increases the degree of positive assortative matching in the labor market. Bassi and Nansamba (2022) find that employment between managers at more profitable firms (i.e., high-ability managers) and workers with higher non-cognitive skills increases when the workers' grades on a questionnaire measuring such skills are revealed during job interviews. Moreover, Abebe et al (2021) find that information about workers' general skills has short-run effects on the probability of being employed with an open-ended contract, which serves as a proxy for employment in formal firms.…”

Young Adults and Labor Markets in Africa

“…Young workers randomly assigned to the workshop were significantly more likely to find stable salaried jobs. Bassi and Nansamba (2021), using a randomized trial in Uganda, find that making the results of a verifiable test of noncognitive skills available to both workers and employers encourages hiring. Assessing the skills of jobseekers and giving them their assessment results in a certificate they can credibly share with firms also increased employment in South Africa (Carranza et al 2021).…”

Searching for Customers, Finding Pollution

“…Within each target sub-county, urban and semi-urban parishes were surveyed. The survey is described in detail in Bassi et al (2021). Here we summarize again the key elements of the sampling and survey design, and then focus on those aspects that were specifically designed for this study.…”