Key message 3 – Providing information to workers can also benefit firms.

Firms can also benefit from interventions that provide information to workers, through two distinct channels. First, skills certification enables them to screen job candidates more effectively, raising quality. Second, interventions that inform jobseekers about existing vacancies can reduce labour shortages or help firms attract the right workers.

  • Screening workers: Enabling jobseekers to communicate their skills better helps firms pick better candidates. This is supported by the earnings gains reported in Figure 2: if employees are being paid more, this suggests the matches are of better quality. For example, Bassi and Nansamba (2018) show that providing certificates of soft skills in Uganda led workers who found employment to earn 11% more in the two years after the intervention. Abebe et al. (2018), also document an increase in earnings conditional on employment.7 Further they show that treated workers stayed in the same job for longer, and that they report their skills to be better matched to their job.
  • Attracting workers: Small firms in developing countries face search costs (Hardy and Casland 2015), which can lead to unfilled vacancies or to a mismatched pool of applicants. Informing jobseekers about vacancies is likely to alleviate this – just as advertising more vacancies leads to more hiring, particularly in slack labour markets (Behaghel et al. 2014). Information about the nature of the vacancies (e.g. the wages paid and how wages grow with tenure) is also likely to help employers attract the right candidates for the position (Ashraf et al. 2018, Deserranno forthcoming).

If firms can benefit from these jobseeker interventions, why do they not provide the same services themselves? Recent evidence suggests that this may be because firms may underestimate the value of specific interventions. For example, IGC research by Abebe et al. (2017b) shows that offering small monetary incentives to applicants improves the standard of applicants, but that local recruiters underestimate the positive impacts of this intervention. In fact, firm managers expect the incentive to decrease applicant quality.

Footnotes

  • 7 Further econometric analysis following Attanasio et al. 2011 shows that the wage increase documented in Abebe et al. 2018 is likely to be due to an increase in workers’ productivity (and not a change in the composition of the people who are employed).