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Occupational choice in early industrializing societies : experimental evidence on the income and health effects of industrial and entrepreneurial work

Author: Christopher Blattman; Stefan Dercon; National Bureau of Economic Research,
Publisher: Cambridge, Mass. : National Bureau of Economic Research, 2016.
Series: Working paper series (National Bureau of Economic Research), no. 22683.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
As low-income countries industrialize, workers choose between informal self-employment and low-skill manufacturing. What do workers trade off, and what are the long run impacts of this occupational choice? Self-employment is thought to be volatile and risky, but to provide autonomy and flexibility. Industrial firms are criticized for poor wages and working conditions, but they could offer steady hours among other  Read more...
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Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Christopher Blattman; Stefan Dercon; National Bureau of Economic Research,
OCLC Number: 959571441
Notes: "September 2016."
Includes online appendix (xxxvii pages).
Description: 1 online resource (50 pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 22683.
Responsibility: Christopher Blattman, Stefan Dercon.

Abstract:

As low-income countries industrialize, workers choose between informal self-employment and low-skill manufacturing. What do workers trade off, and what are the long run impacts of this occupational choice? Self-employment is thought to be volatile and risky, but to provide autonomy and flexibility. Industrial firms are criticized for poor wages and working conditions, but they could offer steady hours among other advantages. We worked with five Ethiopian industrial firms to randomize entry-level applicants to one of three treatment arms: an industrial job offer; a control group; or an "entrepreneurship" program of $300 plus business training. We followed the sample over a year. Industrial jobs offered more hours than the control group's informal opportunities, but had little impact on incomes due to lower wages. Most applicants quit the sector quickly, finding industrial jobs unpleasant and risky. Indeed, serious health problems rose one percentage point for every month of industrial work. Applicants seem to understand the risks, but took the industrial work temporarily while searching for better work. Meanwhile, the entrepreneurship program stimulated self-employment, raised earnings by 33%, provided steady work hours, and halved the likelihood of taking an industrial job in future. Overall, when the barriers to self-employment were relieved, applicants appear to have preferred entrepreneurial to industrial labor.

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