Chances are that your favorite gadget or garment was made by someone in a developing country. Many of these people work in factories with low pay and poor working conditions, but some argue that these jobs can provide a more stable and secure income than the alternatives, such as subsistence agriculture. To pick apart these questions, Chris Blattman, non-resident fellow at CGD and co-author Stefan Dercon coordinated with a number of manufacturing firms in Ethiopia, each of which had more applicants for jobs than they had positions. In order to examine the impact of gaining access to a factory job, they used a lottery to randomly influence which of the applicants were hired, allowing them to study how the lives of those who worked in the factories changed over time, not only in terms of income and wealth but also across other metrics such as happiness.
However, in addition to comparing factory employment to a control group, the experiment also had another treatment aimed at fostering productive self-employment. Those in this second treatment group were given intensive business skills training and several hundred dollars in cash to start an enterprise of their choosing. In the first of this year's CGD Europe Sandwich Seminars, Professor Blattman will present preliminary evidence from the experiment, revealing how, across a variety of different measures of welfare, factory employment stacks up against promoting self-employed work.
The CGD Europe Sandwich Seminars are a series that brings some of the world's leading development scholars to discuss their new research and ideas. The presentations aim to meet an academic standard of quality and are at times technical, and retain a focus on a mixed audience of researchers and policymakers.