Studies

Lack of skills is considered one of the main cause of unemployment and poverty. Youth coming from poorer socioeconomic backgrounds are less likely to have the necessary productive skills that would help them get out of poverty. School dropouts are the most vulnerable among them, who neither have proper education nor practical experience to enter the job market. BRAC’s Skills Training for Advancing Resources (STAR) program provides both on-the-job and classroom training to the school dropout youth so that they can can gain marketable skills and find productive employment. In this study, the researcher conducted a randomized control trial to measure the impact of STAR on the income, employment, and productivity of the targeted youth. The study finds that the on-the-job training has a significant short-and long-term positive impact while the classroom training does not have any additional impact. 

Researcher: Dr Narayan C. Das

Partners: BRAC

Timeline: 2016-2020

Status: Completed

Contact: Dr Narayan C Das; narayan.das@bracu.ac.bd

Publications

• Journal Article: Training the Disadvantaged Youth and Labour Market Outcomes: Evidence From Bangladesh
• Working Paper: Training the Disadvantaged Youth and Labour Market Outcomes: Evidence From a Randomized Controlled Trial in Bangladesh

Context

Underprivileged youth in developing countries like Bangladesh usually do not have the right skills to find productive employment. Specially at risk are the youth who drop out of school. Typically, they lack both proper education and practical experience, and thus, remain unemployed or find low-productivity, informal jobs. They also tend to come from poor families, which means that school dropouts may fall in a perpetual poverty trap.

BRAC’s Skills Training for Advancing Resources (STAR) program trains and supports vulnerable school dropouts to find productive employment. STAR provides both on-the-job training in the form of apprenticeship with a Master Craft Person (MCP) and classroom training, on diverse trades like tailoring, furniture making, fridge/AC repairing, and graphics designing.  STAR program expanded to 120 branch offices (BOs) in 2016, providing an opportunity to rigorously evaluate the impact of apprenticeship programs in Bangladesh and measure the additional impact of classroom training.

The researcher, Dr Narayan Das, Senior Research Fellow of BIGD, was motivated to do this study because there were a handful of rigorous experiments in the developing country context on the impact of apprenticeship with mixed result and there was none on the marginal impact of classroom training, which is a costly intervention. If proven effective, similar programs can be taken to help underprivileged youth change their life’s trajectory.

This study is relevant to SDG 8 (Decent Work and Economic Growth), particularly to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

Research Questions

The study primarily investigates the following questions:

• Does the skills training increases employment, income, and productivity of the underprivileged youth?
• What is the marginal impact of the classroom training?

Methodology

Dr Das designed a randomized control trial (RCT) in 60 selected BOs. The simplified design of the RCT is provided in the figure beside. The baseline survey conducted in 2016 could reach 3186 youths in the study. The first and second follow-up surveys were conducted six and 22 months after the completion of the training, and 2,581 youths from the baseline were successfully interviewed in both rounds.

Findings and Recommendations

Not everyone who were offered the training accepted it; the acceptance rate was 65% for the on-the-job training and 60% for the combined training (on-the-job plus classroom training). Of those who participated in the six-month long training, on-the-job training increased labour market participation by 31 percentage points, on average, in the short-term, compared to the non-participants (control group). Combined training (on-the job + classroom) had a smaller impact, which implies that the classroom training did not have any additional benefit in the short run. However, in the long run, after 22 months, the impact of on-the-job training faded away, while the combined training retained a modest, yet statistically significant impact of 13.6 percentage point.

But the impact of on-the-job training on income, though diminished over time, remained positive and statistically significant.  On average, the training participants earned, per month, BDT 1050 higher than the non-participants in the short run and BDT 799 in the long run. This is mainly because of the long-term shift away from causal labour to better paid wage employment. The study found a statistically significant long-run increase in wage employment and a simultaneous decline in casual day labouring among the on-the-job training participants; this implies that the training had shifted a significant number of youths from low-productivity, low-paying informal sector jobs to higher-productivity, better paying jobs. Consequently, on-the-job training has also been found to have a long-term, positive impact on productivity. Combined training had a positive impact on wage employment in the short run, but the impact fizzled away over time.

Wage employment increased both in MCP as well as other firms, which means that STAR is not just a placement program. But the impact is much higher and longer-term for the MCP firms. This is mainly because STAR prioritized firms with active demand for workers as MCP firms. This has important implications for the design of successful on-the-job training programs.

Overall, the combined training does not have a favourable benefit-cost ratio; thus, the expansion of the combined training does not make much financial sense. On the other hand, the on-the-job training has a benefit-cost ratio of 1.48 and the aggregate benefit is estimated to surpass the cost in four years after the training. Thus, the on-the-job training can be potentially scaled up cost-effectively.  In a country where the vast majority of the people are employed in the informal sector characterized by low-productivity, creating formal employment opportunities for the underprivileged youth is a shift in the right direction.