The Consequence of Educational Reform on Youth Employment: Evidence from an Enrollment Increase in Vocational Training in Ethiopia

Discussion Papers

No.679

by Takahiro Fukunishi and Tomohiro Machikita

November 2017

ABSTRACT

Increasing access to basic-level industrial education in developing economies and its quality improvement are quite important for the industrialization of low-income countries. It may also have an impact on individual labor market outcomes in industrial and en- trepreneurial work. An increase in the labor supply by introduction of a new cohort also induces overcrowding due to competition between the new and old cohorts, which have re- ceived different types of basic-level industrial education. This paper examines the impacts of an educational expansion on youth labor market outcomes, exploiting an Ethiopian re- form in technical and vocational educational training toward competency-based training, which expects to foster human capital through the adoption of a new curriculum and re- moves information asymmetry through public certification of skill levels. This paper tests whether improvements in human capital and information for a new cohort can overcome the problems of crowded labor markets arising due to the educational expansion. Large- scale and nation-wide administrative data suggest that the industrial education reform de- creased the likelihood of employment in permanent, formal, or full-time jobs for the new cohort due to an increase in competition with old cohorts. This effect of large enrollment increase in vocational training pushes young people in general, and males in particular, to choose self-employment. The data also indicates that an industrial education expansion has a lasting negative effect only for women working in permanent, formal, or full-time jobs. Overall, an expansion in vocational training has more negative impacts for young women than for young men.

Keywords: returns to vocational training,educational reform,gender difference
JEL classification: J21,I25,I26,O17

Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.