Latin America and Caribbean

  • The Impact of Training Policies in Latin America and the Caribbean: The Case of Programa Joven

    Aedo and Nunez (2004)

    Original Abstract:

    This research evaluates the "Programa Joven", a training program conducted by the Ministerio del Trabajo of Argentina. We adapt and apply a non-experimental evaluation methodology to answer the following questions: Does "Programa Joven" increase the labor income of the trainees? Does "Programa Joven" increase the probability of being employed? And (3) what is the rate of return to dollars spent on the "Programa Joven"? We used Propensity Scores Matching Estimators as our basic methodology to obtain a measure of the impact of the training program. Our choice of this methodological approach was based upon both the theoretical developments in the area of Program Evaluation and the availability of relevant information. We used three different set of data to estimate the Propensity Scores which allowed us to analyze the question on how sensitive Program impact estimates are to different propensity score specifications? This question has not been addressed by the previous literature. Our results indicate first, that Program impact on earnings were statistically significant for young males and adult females. This result was not sensitive to the number of nearest neighbors. Second, the estimated Program impact on employment was statistically significant for adult females only. Again the result was not sensitive to the number of nearest neighbors. Third, impact estimates on earnings and employment for the groups with statistically significant results were not sensitive to the different sources of information used to estimate the propensity scores. This was a surprising result as we expected to observe greater variability in the impact results across different propensity score specifications. Fourth, the cost-benefit exercise conducted suggest that we required at least 9 years of duration of the earnings impact for the Program to have a positive net present value for the groups with statistically significant results.

    Intervention settings: Rural and urban (across 11 regions)

    Intervention description: Provides an average of 200 hours of training over 14-20 weeks (classroom followed by internship), a monetary subsidy for females with children, transportation expenses, medical checkups, books, materials and work clothing.

    Methodology: Cross-sectional propensity score matching using program beneficiaries and eligible non-participants.

    Sample: Young people from poor households with low education levels and little work experience, who were unemployed or inactive.

    Findings: Positive employment impacts for women of 6% at 12 months, and 15% at 18 months. Beneficiary women generate 93% more labor income than their control counterparts. Decrease in measures of occupational segregation. Negative employment impacts for men.

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  • Medium and Long Run Effects of Nutrition and Child Care: Evaluation of a Community Nursery Programme in Rural Colombia

    Attanasio and Vera-Hernandez (2004)

    Original Abstract:

    In this paper we evaluate the effect of a large nutrition programme in rural Colombia on children nutritional status, school achievement and female labour supply. We find that the programme has very large and positive impacts. Dealing with the endogeneity of treatment is crucial, as the poorest children tend to select into the programme. Methods like Propensity Score Matching would even yield negative estimates of the impact of the program. Our results are robust to the use of instruments that do not depend on individual household choices. We also validate our evaluation strategy by considering the effect of the program on pre-intervention variables. Further, we explore the heterogeneity of the impact of the programme. Children from the poorest backgrounds are the ones that benefit the most.

    Intervention settings: Rural.

    Intervention description: Community nurseries where poor children receive food (purchased by government) and chid care from one of the mothers in the community.

    Methodology: Instrumental variables using distance to nearest center as an instrument.

    Sample: Poor households, based on an eligibility score.

    Findings: Increase in probability of women's employment (0.12 to 0.37) and hours worked (by 75/month.) Positive impact on children's height and grades.

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  • Subsidizing Vocational Training for Disadvantaged Youth in Developing Countries: Evidence from a Randomized Trial

    Attanasio et al (2011)

    Original Abstract:

    This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005. This randomized trial offers a unique opportunity to examine the impact of training in developing countries. We use originally collected data on individuals randomly offered and not offered training. The program raises earnings and employment, especially for women. Women offered training earn 18% more and have a 0.05 higher probability of employment than those not offered training, mainly in formal sector jobs. Cost- benefit analysis of these results suggests that the program generates much larger net gains than those found in developed countries.

    Intervention settings: Urban

    Intervention description: Three months in-classroom training and three months of on-the-job training. Courses provided vocational skills in a diverse number of occupations (including taxi and bus drivers, office assistants, call center operators, medical assistants, textile operators, carpentry assistants, etc.) On-the-job training was provided by legally registered (formal sector) companies, via unpaid internships. Trainees received a daily stipend of $2.20 ($3 for women with children under 7).

    Methodology: RCT

    Sample: Unemployed young people placed in lowest two deciles of income distribution.

    Findings: 11% increase in likelihood to be in paid employment. Wage and salary earnings increase by 18%. Controlling for training institution fixed effects and pre-treatment characteristics: Female trainees' probability of paid employment 19-21 months after program increased by 5% relative to the control group. Women worked an average of 1.1 more days/month and 2.5 more hours/week than women in the control group and earned 18% more than women who didn't receive the training. Impact on total labor income not reported.

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  • Training Disadvantaged Youth in Latin America: Evidence From a Randomized Trial

    Attanasio, Kugler and Meghir (2008)

    Original Abstract:

    Youth unemployment in Latin America is exceptionally high, as much as 50% among the poor. Vocational training may be the best chance to help unemployed young people at the bottom of the income distribution. This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005 on the employment and earnings of trainees. This is one of a couple of randomized training trials conducted in developing countries and, thus, offers a unique opportunity to examine the causal impact of training in a developing country context. We use originally collected data on individuals randomly offered and not offered training. We find that the program raises earnings and employment for both men and women, with larger effects on women. Women offered training earn about 18% more than those not offered training, while men offered training earn about 8% more than men not offered training. Much of the earnings increases for both men and women are related to increased employment in formal sector jobs following training. The benefits of training are greater when individuals spend more time doing on-the-job training, while hours of training in the classroom have no impact on the returns to training. Cost-benefit analysis of these results suggests that the program generates a large net gain, especially for women.

    Intervention settings: Urban

    Intervention description: Three months of classroom training followed by three months of OJT in the form of unpaid internship, with 1009 companies participating.

    Methodology: RCT

    Sample: Unemployed youth from families in the two lowest deciles of the income distribution, from 2001-2005.

    Findings: Increased earnings for men and women, with the largest effects for women. Earnings for women increased on average 18%. Men and women who were offered training (intent-to-treat estimates) were more likely to be employed and to have jobs that offered benefits and to have a formal wage contract. Benefits of OJT found to be higher than that of classroom training.

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  • The Impact of Access to Free Childcare on Women's Labor Market Outcomes: Evidence from a Randomized Trial in Low-Income Neighborhoods of Rio de Janeiro

    Barros et al (2011)

    Intervention settings: Urban.

    Intervention description: Publicly provided child care.

    Methodology: Program assignment originally based on a lottery, with lottery winners getting program and losers being put on waiting list.

    Sample: Poor mothers.

    Findings: Increase in use of care (51% to 94%), mothers' employment (36%-46%) - especially among mothers not working six months before lottery (97%).

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  • Schooling Impacts of Conditional Cash Transfers on Young Children: Evidence from Mexico

    Berhman, Parker and Todd (2011)

    Original Abstract:

    This paper evaluates impacts of Oportunidades, a Mexican conditional cash transfer program, on educational outcomes 5.5 years after program initiation for a group of children who were age 0 to 8 years pre-program. The oldest children within this age range received educational scholarships. The youngest children did not receive the scholarships because they had not yet started the third grade of school (the initial grade for scholarships), but were beneficiaries of the program's health components that included nutritional supplements for children 24 months of age or younger. All of these children also may have benefitted more generally from increased household income resulting from the program. This paper investigates how the program differentially affected younger and older children within this age range and examines whether the early nutritional intervention led to improvements in subsequent educational performance. The program impact estimates are derived from a randomly assigned treatment and control group, which participated for different lengths of time in the program, and from a matched comparison group that had not participated prior to the collection of data in 2003. The empirical findings show positive program impacts on reducing ages at entering school for the younger children as well as on accumulated grades of schooling after 5.5 years of benefits for older children, with estimates implying a 1 percent reduction in the age of entry to primary and an increase in grades of schooling completed to date of about 8 to 9 percent.

    Intervention settings: Rural areas in 7 states

    Intervention description: Conditional cash transfers under PROGRESA provided to children in 320 randomly selected communities for 1.5 years, after which they were also provided to children in the 186 control communities.

    Methodology: RCT (with estimates of longer-term exposure obtained using a matched comparison group).

    Sample: 14,485 children aged 9-15 in 1997 (and 12,457 from 15-21 in 2003) from 506 communities.

    Findings: Estimated impact of 1.5 years longer exposure to the program (i.e., 5.5 years versus 4 years) is 2.4% for boys and 2.7% for girls (and 4.4% for boys and 6.8% for girls who had completed 7 or more grades pre-program). Estimates of the impact of 5.5 years of exposure to the program, obtained by using data from a matched comparison group from 152 additional communities, indicate that completed years of schooling increased by 12-15% among boys and 9-10% among girls, depending on the age group.

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  • The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

    Bruhn, Karlan, and Schoar (2012)

    Original Abstract:

    We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a control group that did not receive any subsidized training. Treatment enterprises were matched with one of nine local consulting firms and met with their consultants once a week for four hours over a one year period. Results from a follow_up survey, conducted after the intervention, show that the consulting services had a large impact on the performance of the enterprises in the treatment group: monthly sales went up by about 80 percent; similarly, profits and productivity increased by 120 percent compared to the control group. We also see a significant increase in the entrepreneurial spirit index for the treatment group, a set of questions designed to illicit the SME owners' confidence in their ability to manage their business and deal with any future difficulties. However, we do not find any significant increase in the number of workers employed in the treatment group.

    Intervention settings: Urban.

    Intervention description: Consulting services.

    Methodology: RCT.

    Sample: 432 small and medium enterprises (30% women decision-makers) with average of 14 full-time employees. Firms existed on average 10 years.

    Findings: Increase in monthly sales by 80%. Profits and productivity increase by 120%. Significant increase in entrepreneurial spirit index (confidence in ability to manage business and deal with future difficulties). No signficant increase in number of workers employed.

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  • Business Literacy and Development: Evidence from a Randomized Trial in Rural Mexico

    Calderon, Cunha, and de Giorgi (2012)

    Original Abstract:

    This paper investigates the effectiveness of basic business training for female entrepreneurs in rural Mexico. Through a Randomized Controlled Trial and panel data on a representative sample of female entrepreneurs, we estimate positive effects of basic applied business training on profits, revenues and number of clients served. At the same time we find a positive effect on the use of "formal" accounting techniques. These effects are estimated in the short-run, about seven months after the end of the business classes, the only treatment offered to our sample of female entrepreneurs.

    Intervention settings: Rural.

    Intervention description: 6 weeks of business literacy classes with two four-hour meetings per week. Total of 48 hours.

    Methodology: RCT.

    Sample: 875 female entrepreneurs (724 in follow-up) of small firms in poor state in Mexico; majority of sample with below secondary education.

    Findings: 24% increase in profits and 20% increase in revenues. 50% of non-attriting businesses had closed by the time of second follow-up survey 28 months after training.

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  • The Labor Market Impacts of Youth Training in the Dominican Republic

    Card et al (2011)

    Original Abstract:

    We report the impacts of a job training program operated in the Dominican Republic. A random sample of applicants was selected to undergo training, and information was gathered 10-14 months after graduation. Unfortunately, people originally assigned to treat- ment who failed to show up were not included in the follow-up survey, potentially compromising the evaluation design. We present estimates of the program effect, including comparisons that ignore the potential nonrandomness of "no-show" behavior, and estimates that model selectivity parametrically. We find little indication of a positive effect on employment outcomes but some evidence of a modest effect on earnings, conditional on working.

    Intervention settings: Urban.

    Intervention description: Basic skills and technical/vocational training (350 hours max). Internship (2 months).

    Methodology: RCT.

    Sample: 1,345 individuals aged 16 to 29, 55% female.

    Findings: 10% increase in monthly earnings coming from an increase in hourly wages (imprecisely estimated). No impact on labor force participation, self-employment or wage labor. No significant impact on employability of trainees.

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  • Keeping it Simple: Financial Literacy and Rules of Thumb

    Drexler, Fischer, and Schoar (2012)

    Original Abstract:

    Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and mixed. Two randomized trials test the impact of financial training on firm-level and individual outcomes for microentrepreneurs in the Dominican Republic. We find no significant effect from a standard, fundamentals-based accounting training. However, a simplified, rule-of-thumb training produced significant and economically meaningful improvements in business practices and outcomes.

    Intervention settings: Urban (Santo Domingo).

    Intervention description: Comparison between: 1) Standard, fundamentals-based accounting training & 2) a simplified, rule-of-thumb training that teaches basic heuristics to manage finances.

    Methodology: RCT.

    Sample: 1,193 business or personal loan clients (90% women).

    Findings: Only rule-of-thumb training produced significant improvements in business practices and outcomes (by 6-12% relative to control). Increase in sales in bad weeks. Impact pronounced for micro-entrepreneurs with poor financial literacy upfront. Impacts suggest reducing complexity of training program.

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