Chris Blattman, Associate Professor, Columbia SIPA
Chris Blattman, Associate Professor, Columbia SIPA
Industrial jobs in an early-industrializing society: Experimental evidence from Ethiopia
Industrial jobs in an early-industrializing society: Experimental evidence from Ethiopia
Activists criticize the poor wages and working conditions in industrial firms. Others counter that industrial jobs offer wage premiums and steady hours, and that queues for these jobs reveal that workers prefer them. To investigate, we worked with five Ethiopian industrial firms with excess applicants to entry-level jobs, randomizing applicants to one of three treatment arms: the job offer; no offer (a control group); or an improved self-employment option, by giving them $300 plus business training. Among those offered the job, turnover was high: 77% quit, often within a few weeks. Most left the industrial sector entirely to return to informal work. Interviews suggest applicants queued mainly to learn their fit with the sector or to smooth shocks, but discovered industrial jobs were unpleasant and risky. Moreover, while the industrial jobs offered more hours than most people’s alternatives over the following year, they paid lower wages. Thus, on balance, the jobs had little impact on incomes. We see no evidence of a segmented labor market or major frictions. In many ways these industrial jobs appear to be another unremarkable form of low-skill labor, but for one finding: large adverse effects on health. Physical disabilities rose by one percentage point for every month in an industrial job. Meanwhile, relieving constraints on informal work significantly reduced interest in industrial work. The grants stimulated self-employment, raising earnings about $1 a week (about 33%). As a consequence, recipients were half as likely to continue seeking industrial work as the control group.