Finding ways to support a growing urban labour force is a key challenge for policy-makers in developing countries. The existing literature suggests that the cost of searching for employment and an inability to signal skills during the recruitment process are particular obstacles to those seeking work.

The researchers therefore evaluated two low-cost interventions – a transport subsidy and a job application workshop – in Addis Ababa, Ethiopia, where unemployment is over 20 per cent and many jobs are insecure and poorly paid.

In the first, individuals were able to collect a subsidy, calibrated to cover the cost of journeys into the city centre where jobs are advertised, up to three times a week for 16 weeks. At the workshop, participants were offered guidance on writing CVs and cover letters and on how to approach job interviews. They also took a mix of standardised personnel selection tests, which were then used to certify their skills.

The researchers found that eight months later, those who had taken part in the workshop were nearly 60% more likely to have permanent employment and nearly 31% more likely to be in formal employment than those in the control group. Individuals who were offered the transport subsidy were 32% more likely to be in formal employment. The effects were particularly strong for women and for less educated workers, who typically find it hardest to obtain high-quality employment in Ethiopia and other developing countries.

They found that the two interventions worked by increasing search efficacy, albeit in very different ways. The workshop improved the quality of the information contained in each application. This was particularly beneficial to the least skilled, who are less able to rely on well-recognised forms of certification. The transport subsidy significantly increased the number of trips job-seekers made to look for work, which increased the amount of information available to them and allowed them to target their job applications more selectively. On average control individuals with a high-school degree received an offer for a permanent job every 10.5 applications; for the treated individuals the rate was around one in every 4.6.

The work, which was carried out with the Ethiopian Development Research Institute under the aegis of the International Growth Centre, has now been used by the Ethiopian government and the World Bank in the design of a new urban safety net programme which launched in 2016.