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

Produced by: 
Institute for the Study of Labor (IZA)
Available from: 
December 2008
Paper author(s): 
Orazio P. Attanasio
Adriana D. Kugler
Costas Meghir
Education - Health

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 who have already left the formal education system. 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 men and women. Those offered training earn about 12% more than those not offered training. Much of the earnings gains following training are related to increased employment in formal sector jobs, which offer non-wage benefits that are otherwise unavailable to workers in developing countries. 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 much larger net gains than those found in developed countries.


Research section: 
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