Are Small Firms Labor Constrained? Experimental Evidence from Ghana
- (pp. 253-84)
Abstract
We report the results of a field experiment that randomly placed unemployed young people as apprentices with small firms in Ghana and included no cash subsidy to firms (or workers) beyond in-kind recruitment services. Treated firms experienced increases in firm size of approximately half a worker and firm profits of approximately 10 percent for each apprentice placement offered, documenting frictions to novice hiring. We interpret the program as providing a novel worker screening technology to firms, as (voluntary) worker participation included nonmonetary application costs, echoing the widespread use of an entrance fee mechanism for hiring apprentices in the existing labor market.Citation
Hardy, Morgan, and Jamie McCasland. 2023. "Are Small Firms Labor Constrained? Experimental Evidence from Ghana." American Economic Journal: Applied Economics, 15 (2): 253-84. DOI: 10.1257/app.20200503Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- J13 Fertility; Family Planning; Child Care; Children; Youth
- J23 Labor Demand
- L25 Firm Performance: Size, Diversification, and Scope
- M51 Personnel Economics: Firm Employment Decisions; Promotions
- M53 Personnel Economics: Training
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
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