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

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.

Attanasio, Kugler and Meghir (2008)UrbanRCTThree months of classroom training followed by three months of OJT in the form of unpaid internship, with 1009 companies participating.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.http://www.nber.org/papers/w13931Unemployed youth from families in the two lowest deciles of the income distribution, from 2001-2005.