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Working Paper

Employment Generation in Rural Africa : Mid-Term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda

ACCOUNTING AGE COHORT AGGRESSION ATTRITION AVAILABILITY OF CREDIT BANK ACCOUNT BENEFICIARIES BENEFICIARY BONDS BOUNDED RATIONALITY BUDGETING CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL STOCK CASH BALANCE CASH TRANSFER COGNITIVE ABILITY COMMITMENT DEVICE CONSUMPTION LEVELS CONTROL GROUPS CREDIT CONSTRAINTS DECISION MAKING DEMOCRACY DEVELOPING COUNTRIES DEVELOPMENT ASSISTANCE DEVELOPMENT BANK DEVELOPMENT EFFECTIVENESS DEVELOPMENT STRATEGY DISBURSEMENT DISCOUNT RATE DURABLE DURABLE ASSETS ECONOMIC DECISIONS ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIC THEORY ECONOMICS ECONOMICS LITERATURE EDUCATIONAL ATTAINMENT EMPLOYMENT EMPLOYMENT GROWTH ENTREPRENEURSHIP EXCESS DEMAND EXCHANGE RATES EXPECTED RETURNS EXTERNALITIES FEMALE EMPLOYMENT FINANCES FINANCIAL DEVELOPMENT FIXED COSTS FORMAL SCHOOLING FUTURE RESEARCH GENDER GROUP DYNAMICS HOUSEHOLD WEALTH HUMAN CAPITAL HUMAN DEVELOPMENT INCOME INDIFFERENCE CURVES INDUSTRIAL ECONOMIES INFLATION INNOVATIONS INSTRUMENT INSURANCE INSURANCE MARKETS INTERPERSONAL RELATIONSHIPS INTERVENTIONS INTRINSIC VALUE INVESTMENT CHOICE INVESTMENT DECISIONS LABOR FORCE LABOR HOURS LABOR MARKET LABOR UTILIZATION LABORERS LEADERSHIP LEARNING LEVEL OF RISK LIQUID WEALTH LITERACY LITERACY TRAINING LOAN LOAN TERMS LOCAL GOVERNMENT MARKET FAILURE MARKET INTEREST RATE MARKET RATE OF RETURN MENTAL HEALTH MICROCREDIT MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MOBILE PHONES MONEYLENDER MONEYLENDERS MUTUAL INSURANCE NATIONAL INCOME NORMAL GOOD OPPORTUNITY COST PEER PRESSURE POLITICAL CONTROL POLITICAL PARTICIPATION POLITICAL SCIENTISTS PRIMARY SCHOOL PRIME LENDING RATE PRIVATE LENDERS PRODUCTION FUNCTION PRODUCTIVITY PSYCHOLOGY PUBLIC INVESTMENTS PUBLIC PARTICIPATION PUBLIC SPENDING RATES OF RETURN REAL INTEREST REAL INTEREST RATE RECALL RENTS RETURN RISK AVERSE RISK AVERSE INDIVIDUALS RISK AVERSION RISK NEUTRAL SCHOOLS SHORT-TERM BORROWING SKILLS TRAINING SMALL LENDERS SMALL LOANS SOCIAL BEHAVIOR SOCIAL CAPITAL SOCIAL COHESION SOCIAL GROUPS SOCIOLOGISTS STOCKS TERRORISM THINKING TRADING TRAINING PROGRAMS TRANCHE UNEMPLOYMENT UTILITY FUNCTION VOCATIONAL SKILLS VOCATIONAL TRAINING WAGES WORKING CAPITAL WORKING MEMORY YOUNG PEOPLE YOUTH
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World Bank, Washington, DC
Africa | Uganda
2017-06-01T20:46:29Z | 2017-06-01T20:46:29Z | 2011-12

Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? The authors experimentally evaluate one of Uganda's largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs. Mid-term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of non-household employment double and cash earnings increase by nearly 50 percent relative to the control group. The authors estimate the transfer yields a real annual return on capital of 35 percent on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is unexplained, however, and is unrelated to conventional economic measures of ability, suggesting we have much to learn about the determinants of entrepreneurship. Finally, these economic gains result in modest improvements in social stability. Measures of social cohesion and community support improve mildly, by roughly 5 to 10 percent, especially among males, most likely because the youth becomes a net giver rather than a net taker in his kin and community network. Most strikingly, we see a 50 percent fall in interpersonal aggression and disputes among males, but a 50 percent increase among females. Neither change seems related to economic performance nor does social cohesion a puzzle to be explored in the next phase of the study. These results suggest that increasing access to credit and capital could stimulate employment growth in rural Africa. In particular, unconditional and unsupervised cash transfers may be a more effective and cost-efficient forming of large-scale aid than commonly believed. A second stage of data collection in 2012 will collect longitudinal economic impacts, additional data on political violence and behavior, and explore alternative theoretical mechanisms.

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