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Wage subsidies and youth employment in South Africa: Evidence from a randomised control trial Wage subsidies and youth employment in South Africa: Evidence from a randomised control trial HOT

In an RCT the participants in the study are randomly divided into two groups – one which received the intervention, in this case a voucher for a wage subsidy which a firm who employs the individual could claim for six months (called the treatment group), and the second group which does not receive anything (called the control group). Since allocation to the groups is random and both groups share similar characteristics, any observed changes on average should be the result of the wage subsidy voucher. We can thus attach a causal interpretation to our results.  The key finding of the paper is that those who were allocated a wage subsidy voucher were more likely to be in wage employment both one year and two years after allocation. The impact of the voucher thus persisted even after it was no longer valid. The magnitude of these effects was relatively large –  those in the voucher group were 7.4 percentage points (approximately 25 percent) more likely to be in wage employment one year after allocation and of similar magnitude two years later. This impact was not driven by changes in the sample composition.

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Category Systematic reviews
Author James Levinsohn, Neil Rankin, Gareth Roberts, Volker Schöer