Publication: Short-Run Welfare Impacts of Factory Jobs: Experimental Evidence from Ethiopia
Loading...
Files in English
1,078 downloads
Date
2020-07
ISSN
Published
2020-07
Author(s)
Editor(s)
Abstract
Many countries in Sub-Saharan Africa face a rapidly growing population and labor force in demand of good jobs. Ethiopia has reacted to this challenge by prioritizing large-scale industrial development through the construction of industrial parks to drive exports, job creation, and growth. However, the African experience with industrial parks so far has been mixed. To provide further evidence on the welfare effects of factory jobs in Ethiopia, this study conducted an experiment that facilitated the job application and onboarding process for young female job seekers at three factories. Using panel data from 827 applicants, the study finds that the extra support increased the likelihood of being employed in the treatment group in the short run, largely driven by wage and factory work. Further, the intervention raised reported monthly income by nearly 30 percent in the treatment group. However, the study also finds an adverse impact on health outcomes as well as downward adjustments of applicants' expectations and perceptions of the earnings potential and desirability of factory work in response to the treatment.
Link to Data Set
Citation
“Abebe, Girum; Buehren, Niklas; Goldstein, Markus. 2020. Short-Run Welfare Impacts of Factory Jobs: Experimental Evidence from Ethiopia. Policy Research Working Paper;No. 9325. © World Bank. http://hdl.handle.net/10986/34171 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Intergenerational Income Mobility around the World(Washington, DC: World Bank, 2025-07-09)This paper introduces a new global database with estimates of intergenerational income mobility for 87 countries, covering 84 percent of the world’s population. This marks a notable expansion of the cross-country evidence base on income mobility, particularly among low- and middle-income countries. The estimates indicate that the negative association between income mobility and inequality (known as the Great Gatsby Curve) continues to hold across this wider range of countries. The database also reveals a positive association between income mobility and national income per capita, suggesting that countries achieve higher levels of intergenerational mobility as they grow richer.Publication The Future of Poverty(Washington, DC: World Bank, 2025-07-15)Climate change is increasingly acknowledged as a critical issue with far-reaching socioeconomic implications that extend well beyond environmental concerns. Among the most pressing challenges is its impact on global poverty. This paper projects the potential impacts of unmitigated climate change on global poverty rates between 2023 and 2050. Building on a study that provided a detailed analysis of how temperature changes affect economic productivity, this paper integrates those findings with binned data from 217 countries, sourced from the World Bank’s Poverty and Inequality Platform. By simulating poverty rates and the number of poor under two climate change scenarios, the paper uncovers some alarming trends. One of the primary findings is that the number of people living in extreme poverty worldwide could be nearly doubled due to climate change. In all scenarios, Sub-Saharan Africa is projected to bear the brunt, contributing the largest number of poor people, with estimates ranging between 40.5 million and 73.5 million by 2050. Another significant finding is the disproportionate impact of inequality on poverty. Even small increases in inequality can lead to substantial rises in poverty levels. For instance, if every country’s Gini coefficient increases by just 1 percent between 2022 and 2050, an additional 8.8 million people could be pushed below the international poverty line by 2050. In a more extreme scenario, where every country’s Gini coefficient increases by 10 percent between 2022 and 2050, the number of people falling into poverty could rise by an additional 148.8 million relative to the baseline scenario. These findings underscore the urgent need for comprehensive climate policies that not only mitigate environmental impacts but also address socioeconomic vulnerabilities.Publication Engineering Ukraine’s Wirtschaftswunder(Washington, DC: World Bank, 2025-07-29)As Ukraine emerges from the devastation of war, it faces a historic opportunity to engineer its own Wirtschaftswunder—a productivity-driven economic transformation akin to post-war West Germany. While investment-led growth may offer quick wins, it is efficiency, innovation, and institutional reform that will determine Ukraine’s long-term economic trajectory. Drawing on rich micro-level firm data spanning 25 years, this paper uncovers deep structural distortions that have suppressed creative destruction and productivity in Ukraine. It finds that business dynamism is on the decline, alongside rising market concentration among incumbent businesses, including low productivity state owned enterprises. To inform priorities for reviving business dynamism, this study develops a model of creative destruction drawing on Acemoglu et al. (2018) and Akcigit et al. (2021). The quantitative assessment highlights that policies that discipline entrenched incumbents are the bedrock for reviving business dynamism and engineer Ukraine’s Wirtschaftswunder. Policies targeting specific types of firms have limited efficacy when incumbents run wild.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Disentangling the Key Economic Channels through Which Infrastructure Affects Jobs(Washington, DC: World Bank, 2025-04-03)This paper takes stock of the literature on infrastructure and jobs published since the early 2000s, using a conceptual framework to identify the key channels through which different types of infrastructure impact jobs. Where relevant, it highlights the different approaches and findings in the cases of energy, digital, and transport infrastructure. Overall, the literature review provides strong evidence of infrastructure’s positive impact on employment, particularly for women. In the case of electricity, this impact arises from freeing time that would otherwise be spent on household tasks. Similarly, digital infrastructure, particularly mobile phone coverage, has demonstrated positive labor market effects, often driven by private sector investments rather than large public expenditures, which are typically required for other large-scale infrastructure projects. The evidence on structural transformation is also positive, with some notable exceptions, such as studies that find no significant impact on structural transformation in rural India in the cases of electricity and roads. Even with better market connections, remote areas may continue to lack economic opportunities, due to the absence of agglomeration economies and complementary inputs such as human capital. Accordingly, reducing transport costs alone may not be sufficient to drive economic transformation in rural areas. The spatial dimension of transformation is particularly relevant for transport, both internationally—by enhancing trade integration—and within countries, where economic development tends to drive firms and jobs toward urban centers, benefitting from economies scale and network effects. Turning to organizational transformation, evidence on skill bias in developing countries is more mixed than in developed countries and may vary considerably by context. Further research, especially on the possible reasons explaining the differences between developed and developing economies, is needed.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Do Factory Jobs Improve Welfare? Experimental Evidence from Ethiopia(Published by Oxford University Press on behalf of the World Bank, 2025-02-12)This study explores the impact of a light-touch job-facilitation intervention that supported young female job seekers during the application process for factory work in a newly constructed industrial park in Ethiopia. Using data from a panel of 687 job seekers and randomized access to the support intervention, the study finds that treated applicants are more likely to be employed and have higher earnings and savings eight months after baseline, although these impacts are short-lived. Four years later, the effects on employment and income largely dissipated. The results suggest that young women face significant barriers to engaging in factory work in the short run that a simple job-facilitation intervention can help overcome. In the long term, however, these jobs do not offer a better alternative than other income-generating opportunities.Publication COVID-19 Impacts on Women Factory Workers in Ethiopia(World Bank, Washington, DC, 2020-06)As the Coronavirus 2019 (COVID-19) pandemic continues to disrupt international supply chains and local economies, workers employed in export-oriented industries are likely to experience both demand and supply shocks due to the crisis. In Ethiopia, a slowed global economy can pose a significant threat to the country’s industrial parks and their factories in the female-concentrated garment industry, forcing them to lay off workers or even shut down their operations. To monitor the potential effects of the pandemic and support the design of evidence-based policy responses, the gender innovation policy initiative for Ethiopia (GIPIE) is conducting a high-frequency phone survey on a sample of 323 recently hired female factory workers in Ethiopia. This brief reports on the first two waves of data collected between late March and late May 2020, showing the evolution of this sample of female workers’ employment status, earnings, and expectations over the course of the pandemic. Due to the size of the sample and the fact that it only includes recent hires at the Bole Lemi Industrial Park, the results may not generalize for the full population of women factory workers in industrial parks. Data collection from the ongoing high-frequency phone survey of women factory workers in Bole Lemi Industrial Park will continue in the coming months, with recurring surveys every month for a total of 6 rounds. By tracking the impacts of the COVID-19 pandemic, these data collection efforts aim to equip policymakers with timely, actionable data to better design and implement policy responses in support of Ethiopia’s women factory workers.Publication The Impacts of COVID-19 on Women-Owned Enterprises in Ethiopia(World Bank, Washington, DC, 2020-07)This brief summarizes findings from a high-frequency survey of women-owned firms in Ethiopia which participate in the International Development Association (IDA) - financed Women Entrepreneurship Development Project (WEDP). Over the past five years, WEDP reached nearly 40,000 women-owned firms in Ethiopia with meso-loans and business training. Many WEDP firms had been on a high-growth trajectory, with firms that benefited from WEDP services growing incomes by 67 percent and employment by 55 percent over a three-year period prior to the crisis. This brief is based on the results from the first round of the survey, implemented between May 15, 2020 and June 15, 2020, revealing some initial insights into the scale of the impacts and the nature of the challenges currently facing the WEDP firms.Publication The Economic Lives of Young Women in the Time of Ebola(World Bank, Washington, DC, 2018-12)The authors evaluate an intervention to raise young women’s economic empowerment in Sierra Leone, where women frequently experience sexual violence and face multiple economic disadvantages. The intervention provides them with a protective space (a club) where they can find support, receive information on health or reproductive issues and vocational training. Unexpectedly, the post-baseline period coincided with the 2014 Ebola outbreak. Our analysis documents the impact of the Ebola outbreak on the economic lives of 4,700 women tracked over the crisis, and any ameliorating role played by the intervention. In highly disrupted control villages, the crisis leads younger girls to spend significantly more time with men, out-of-wedlock pregnancies rise, and as a result, they experience a persistent 16pp drop in school enrolment post-crisis. These adverse effects are almost entirely reversed in treated villages because the intervention enables young girls to allocate time away from men, preventing out-of-wedlock pregnancies and enabling them to re-enroll in school post-crisis. In treated villages, the unavailability of young women leads some older girls to use transactional sex as a coping strategy. The intervention causes them to increase contraceptive use so this does not translate into higher fertility.Publication Empowering Adolescent Girls in a Crisis Context(World Bank, Washington, DC, 2019-07)In Sierra Leone, the empowerment and livelihoods for adolescents (ELA) initiative sought to enhance adolescent girls’ social and economic empowerment by providing life skills training, livelihood training, and credit support to start income-generating activities. The Ebola crisis occurred during the project, resulting in curbed implementation. In contrast, younger girls (12 to 17 years old) who resided in communities that benefitted from the program in high Ebola disruption areas were more likely to be in school and saw their numeracy and literacy levels improve. However, as younger women spend less time with men in the presence of ELA, men likely shift their attention to older girls: the evaluation finds an increase in unwanted and transactional sex by older girls in areas highly exposed to the Ebola crisis. As the program was implemented, the Ebola epidemic hit Sierra Leone. First, in an effort to stem the spread of the disease, the government-imposed quarantines, limited travel, and closed public spaces such as markets in certain areas, which significantly impacted the economic activities of men and women. Second, schools were closed for an entire academic year. Finally, Sierra Leone’s limited health resources were diverted into caring for patients and preventing the spread of the epidemic, limiting their ability to attend to other issues such as sexual and reproductive health. These results show how safe spaces interventions can be effective even in the face of large-scale shocks such as Ebola crises as seen in Democratic Republic of Congo (DRC) and Uganda, as well as other shocks constraining economic and social life, by buffering girls from the adverse effects of crises.
Users also downloaded
Showing related downloaded files
Publication Remarks to the Annual Meetings 2020 Development Committee(World Bank, Washington, DC, 2020-10-16)David Malpass, President of the World Bank Group, announced that the Board approved a fast track approach to emergency health support programs that now covers 111 countries. Most projects are well advanced, with average disbursement upward of 40 percent. The goal is to take broad, fast action early. The operational framework presented back in June has positioned the Bank to help countries address immediate health threats and social and economic impacts and maintain our focus on long-term development. The Bank is making good progress toward the 15-month target of 160 billion dollars in surge financing. Much of it is for the poorest countries and will take the form of grants or low-rate, long-maturity loans. IFC, through the Global Health Platform, will be providing financing to vaccine manufacturers to foster expanded production of COVID-19 vaccines in both part 1 and 2 countries, providing production is reserved for emerging markets. The Development Committee holds a unique place in the international architecture. It is the only global forum in which the Governments of developed countries and the Governments of developing countries, creditor countries and borrower countries, come together to discuss development and the ‘net transfer of resources to developing countries.’ The current International Financial Architecture system is skewed in favor of the rich and creditor countries. It is important that all voices are heard, so Malpass urged the Ministers of developing countries to use their voice and speak their minds today. Malpass urged consideration of how we can build a new approach to debt restructuring that allows for a fair relationship and balance between creditors and debtors. This will be critical in restoring growth in developing countries; and helping reverse the inequality.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.