Journal of Political Economy

The paper estimates productivity gains from a soft skills training at the workplace among Indian garnment workers.The estimated gains are 13.5% on average with greater gains among trainees who work together and untreated coworkers benefitting indirectly. Despite these productivity gains, the results do not show significant effects on wages or retentions due to existing labor market frictions.

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 The World Bank Research Observer

This is a critical review of business training evaluations which in summary reports on most evaluations suffering from small sample sizes, a focus on short-term impact measurements as well as methodological limitations such as survey attrition. Even in the short-term the impacts on business survival rates are modest but several business training programs help prospective entrepreneurs to start their own businesses. Finally, trainees adopt some of the taught practices but there is little impact on profits or sales. Overall, there is only limited evidence to guide policymakers as it is unclear whether any observed effects are due to productivity gains or from drawing sales from competing businesses.

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The World Bank Research Observer

This article reviews the evidence of the effectiveness for a variety of Active Labor Market Policies in developing countries incl. vocational training, wage subsidies and search and matching assistance.  Despite of the positive theoretical expectations, many evaluations find no significant impacts on employment or earnings potentially due to fewer market failures in urban labor markets than expected. The authors therefore also present examples which seem to be more promising.

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This articles examines the correlates of managerial characteristics with productivity using survey data on managers as well as detailed production data. The most relevant factor seem to be managerial attention and control. Managerial practices seem to enable faster learning-by-doing.

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American Economic Review: Papers & Proceedings

This paper examines why firms in developing countries have relatively lower productivity and the authors focus on management practices, delegation of decision making and financial constraints. The authors find that firms in developing countries tend to be badly managed that financial constraints limit firms' growth and that delegation of decisionmaking is very limited because owners fear that managers may steal from them.

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The Quarterly Journal of Economics

With a management field experiment, the authors examine whether differences in management practices can explain differences in productivity. The treatment consists of offering free management consulting services. Adoption of management practices raises productivity through improved quality, efficiency, reducing inventory and in the long run allowed firms to open more production plants. Profitable practices were apparently now adopted earlier as firms faced information constraints. Finally, barriers to market entry were relatively high and thereby relatively badly managed firms were able to survive.

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American Economic Review

This paper examines the variation of management practices and the authors find that 40% of the variation in management practices stems from different plants within the same firm. Further, management practices explain about 20% of the variation in productivity. Thereby management practices are as relevant as human capital for example or even more relevant. Both business environment and learning  from extremely productive plants can improve management practices of existing firms.

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Oxford Review of Economic Policy

Earlier randomized controlled trials were unable to detect impacts of business trainings on profits or sales. This articles considers more recent evidence and shows that business trainings can increase profits and sales by 5-10 percent. While this corresponds to optimistic expectations, most of the field experiments do not have the statistical power to detect such changes. The review then proposes how business trainings can be designed more effectively and discusses scenarios in which programs can be scaled up effectively.

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American Economic Journal: Applied Economics

This articles examines the impacts of a randomized intervention offering consulting on management practices  after 9 years. Of the initially adopted management practices about 50% were still practiced in the treatment group plants and not in the control group plants. Several practices spread within firms but not across firms. The most commonly stated reasons for dropping certain practices included managerial turnover and lack of director time. 

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Campbell Systematic reviews

This is a systematic review of 40 rigorous evaluations of business-support interventions that target small and medium enterprises. The authors find that business-support interventions improve firm performances and create jobs but there is still lack of evidence on which interventions work best and why requiring more rigorous impact evaluations.

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American Economic Journal: Applied Economics

This paper examines the impact of being offered an industrial job compared to a startup grant plus entrepreneurial training compared to a pure control. The job offer doubles exposure to industrial work but most worker quit within a few months. Therefor it does not have any impact on employment or earnings. The applicants accepted the job to cope with temportary adverse shocks but at the same time the industrial work exposure led to health problems. With the business grant plus training, applicants preferred entrepreneurship compared to industrial labor.

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This paper examines the main reasons for high turnover rates and finds unrealistic expectations, poor working conditions, difficulties combining domestic responsibilities and factory employment as the main reasons. Especially low wages and poor working conditions lead to high turnover which may affect competition in global markets as well as economic development from industrialization.

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The Journal of Politics

We identify the effects of employment on political participation by collaborating with 27 large companies in Ethiopia to randomly assign jobs to equally qualified female applicants. The job offers increase formal employment and earnings, but we can clearly reject any positive effects on political participation. We find no effects on political interest, raising issues, or protest activity, and we find negative effects on participation in community meetings. We further find that job offers reduce internal and external political efficacy, suggesting that employment may actually be politically disempowering. Our qualitative data suggest that several features of the jobs may contribute to lower political efficacy directly.

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The Quarterly Journal of Economics

This paper shows that social skills are increasingly rewarded in the US labor market as the share of jobs with human interactions grew and the share of less social jobs reduced. In particular jobs requiring math skills as well as social skills had high employment and wage growth. To gain a better understanding of these patterns, the paper also provides a theoretical model. Social skills can be essential to reduce coordination costs, allows workers to specialize and can make team work more efficient.

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World Development

This paper examines the effectiveness of two soft skills training programs targeting Jamaican entrepreneurs and documents short-run impacts on business outcomes but no significant impacts after one year. Further, the authors do not find any impacts for women and no impacts for a training that combines soft and hard skills. The soft skills training persistently improves both self-reported as well as incentivized measures of soft skills.

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This paper studies the impact of the Skills for Effective Development (SEED) program which can be compared to an in-residence mini-MBA with a training that lasts three weeks. The program contained two treatments - hard-skills MBA with 75% hard skills and 25% soft skills and a soft-skills MBA with the reverse mix. After 3.5 yeard the results indicate that the training increased both hard and soft skills but only the soft skills could be linked to improved self-efficacy, persuation and negotiation. Improved skills also led to higher earnings primarily through self-employment, increased rate in starting a business and several other improved business outcomes including job creation. Given these positive impacts, both types of the program were cost-effective.

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American Economic Review

This paper examines experimentally the impacts of randomly hiring large shares of laborers in Indian villages in external month-long jobs outside the rural labor market. This external hiring shock increases wages and reduces local employment rates during time periods right before or after the main harvest seasons. During lean periods, wages and employment do not changes but workers who are not hired are more likely to be employed in the external month-long work program. Many of those workers would have otherwise taken up self-employment but are better off when hired through the work program.

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American Economic Review

This paper examines the impacts of corrupt hiring for government jobs. Those who get hires pay on average a bribe corresponding to 17 monthly salaries but against what one would expect the hires are of the same quality as those who were hired based on mired. As jobs differ, correlations between wealth and quality of applicants can be positive and negative. However, in the setting examined the correlation was positive leading to relatively good performance of hires.

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Annual Review of Economics

This paper reviews experimental studies that examine the constraints on the growth of firms. Studies have shown that especially smaller firms face capital constraints and it is crucial to alleviate such capacity constraints. While urban labor markets for laborer with lower skill levels work reasonably well, labor markets for high-skilled laborers have frictions which affect firms. Managerial training delivered to small firms tends not to be effective. Demand shocks can effectively generate firm growth. Studies are most valuable when they are based on theories and complement existing evidence.

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American Economic Journal: Applied Economics

This paper examines the impact of a wage subsidy provided to small enterprises in Sri Lanka. The results show that firms increased employment during the subsidy period of 12 months and the wage subsidy increased business survival. However, there was no long-term impact on employment after the subsidy period. Further, profits and sales remained unchanged both during and after the subsidy period.

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Journal of Development Economics

Multi-faceted graduation programs have been very effective in lifting people out of poverty. These programs transfer productive assets, give regular training and coaching, regular cash transfers for consumption support and access to savings. Given their multifaceted nature, implementation costs are quite high. This paper therefore examines which components can lead to long-term effects and examine whether the asset transfer or the provision of a savings account with deposit collection could have similar effects to the multi-faceted program. The asset transfer on its own does not generate similar impacts, the savings account with deposit collection does have similar impacts but these are short-lived. 

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Journal of Development Economics

This paper examines compliance with minimum wages in developing countries, and develops a model to show why governments may tolerate non-compliance. Many small firms would not be able to survive if they were to comply with minimum wage laws. Therefore, governments have an incentive to tolerate non-compliance. Further, worker complaints are the main motivation for governments to inspect firms for non-compliance. The paper provides a theoretical model to rationalise these observations. 

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Journal of Development Economics

This paper aims to examine jobseekers' preferences including their reservation wage and how much they value non-wage amenities. The authors use four different methods for elicitation using a job-matching center and find that the Discrete Choice Experiments work best and can be useful to guide policymakers as well as employers to design policies and compensation bundles considering both the reservation wage and non-wage amenities.

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The World Bank Economic Review

As very few management training programs are cost-effective, this paper examines the cost-effectiveness of a mentorship program provided to Kenyan microentrepreneurs. The authors find that for each USD of spent on the program, the average profit increases by 1.63 USD. Compared to most other training programs, this program has a higher impact and a lower cost. The paper then discusses how the mentorship program performs better than standard classroom training to improve future interventions designed to increase managerial capacity.

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