Imran Rasul, University College London

Search and Matching in Low-income Labor Markets: Evidence from a Six-Year Field Experiment

Abstract: Many developing countries face the challenge of helping workers find good jobs. We present the results of a six-year field experiment designed to study the job search process among young workers across urban labor markets in Uganda. The experiment identifies the roles that initial heterogeneity in worker skills, information and their interaction, play in the job search process. We find search behavior varies across the skills distribution: skilled workers revise upward their beliefs over the job offer arrival rate and the distribution of wage offers, they exert more search effort along multiple margins, and they direct search towards larger and more formal firms. Information workers receive about their own job prospects also causes them to change job search strategies. How they do so differs between skilled and unskilled workers. Relative to skilled workers that receive no information, skilled workers with information revise down their beliefs over the job offer arrival rate and wage offer distribution (especially the left tail of wage offers), and search over lower quality firms. In sharp contrast, unskilled workers with information -- relative to unskilled control workers -- react by seeking to borrow credit, to finance setting up in self-employment. The differential search strategies across workers have real impacts on their long run labor market outcomes six years later. Our study shows the importance of underlying sources of worker heterogeneity in determining the job search process, and the role that job assistance programs can play in targeting and directing workers towards better jobs.

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