from EVIDENCE to POLICY Learning what works, from the Human Development Network April, 2013 76517 Can Entrepreneurship Training Improve Work Opportunities for College Graduates? Improving educational achievement for youth doesn’t best and in what context is still something that govern- skills and education always result in better employment opportunities, and ments are grappling with. this can be especially acute in developing countries. The World Bank is committed to helping countries As the World Bank’s 2013 World Development Report meet the employment needs of their people, part of highlights, the mismatch between the skills and aspi- the United Nations Millennium Development Goals. rations of college graduates and the realities of labor In Tunisia, the World Bank worked with the govern- markets not only limits a country’s economic develop- ment to evaluate a program designed to give university ment, but can also affect social cohesion. In the Middle students entrepreneurship training and assistance de- East and North Africa, access to higher education has veloping a business plan. The evaluation found that been booming but so have unemployment rates among the program increased self-employment and helped young adults. Joblessness and underemployment are students develop some skills associated with success- viewed as some of the triggers of the Arab Spring, ful entrepreneurship. As new and old governments in which started with Tunisia’s so-called Jasmine Revolu- the region grapple with high unemployment among tion in early 2011. Even before the Arab Spring, many skilled and educated youth, the lessons learned from countries in the region—and elsewhere – recognized the evaluation will help policymakers and develop- the importance of improving employment opportuni- ment experts hone programs that deliver an impact. ties for their citizens. But what sort of programs work Context The Government of Tunisia has long recognized the the government made changes in the undergraduate gap between the expectations of the growing number curriculum to introduce a special entrepreneurship of college graduates and existing jobs in the economy. track. Students in their last semester could receive Similar to many countries in the Middle East and entrepreneurship training and support developing a North Africa region, the unemployment rate among business plan. The program began in the 2009/2010 university-educated Tunisian youth is extremely high. academic year and eligible students in the country’s 12 The rate in 2009 was 44 percent, compared with 34 public universities took part during the second semes- percent in 2005. As part of a set of measures to expand ter, running from February to June, 2010. employment opportunities among graduates, in 2009 Evaluation All 18,682 students in their third year, which is the and half to continue with the standard university cur- last year, of university (licence appliquée) were eligi- riculum. Randomization was conducted at the proj- ble to apply for the program. Just over 9 percent, or ect level and stratified by gender and study subject. 1,702 students, filled out an application form. Some The treatment group included 856 students, and the students applied in pairs, so the total number of regis- control group 846 students. The students took part in tered projects was 1,506. Two-thirds of the applicants the training program between February 2010 and June were women, which reflected their enrollment level in 2010, when they graduated. Follow-up interviews were the universities. conducted in-person between April and June 2011, a Because the program only had capacity for about few months after the Tunisian revolution. Interviews half the number of applicants, researchers were able included questions on employment, business skills, skills and education to randomly assign half the students to the program behavioral skills, personal aspirations, and attitudes. Findings Students assigned to the entrepreneurship- employment rates remained unchanged. Approximately 29 track were more likely to be self-employed one percent of students were employed one year after graduation, year after graduation. while 49 percent were unemployed. This suggests that the program partly shifted graduates from wage-employment Students who were in the training program were 3 percent- into self-employment. While it’s possible that graduates age points more likely to be self-employed than those who starting their own businesses freed up wage jobs for those didn’t receive the same training. Because the self-employ- not in the program, the evaluation was not designed to mea- ment rate in the control group was very low—4.4 percent— sure such effects. Overall, there was no discernible effect on this 3 percentage point gain equals a 68 percentage increase the likelihood that graduates were employed in any capacity in the likelihood that someone who participated in the en- one year after graduation. trepreneurship track would be self-employed after gradua- tion. (Indicators excluded employment in a family business.) The program itself was very comprehensive and sought to give students what they needed to While the program met the primary objective of develop themselves as entrepreneurs and to increasing self-employment, the overall create successful business plans. employment rate among program beneficiaries didn’t change. The program had two parts. The first consisted of a 20- day entrepreneurship course organized by the public Graduates of the entrepreneurship track were more likely to employment office, which aimed to give students the start their own businesses, but not more likely to find sala- business, behavioral and networking skills for success- ried employment. In fact, the overall employment and un- ful business creation. Students were given training in This policy note is based on the paper, “Entrepreneurship training and self-employment among university graduates: Evidence from a randomized trial in Tunisia,� by Patrick Premand (World Bank), Stefanie Brodmann (World Bank), Rita Almeida (World Bank and IZA), Rebekka Grun (World Bank), Mahdi Barouni (République Tunisienne, Caisse Nationale de Sécurité Sociale) September, 2012 developing business ideas, writing a business plan and nisia, and in many parts of the Arab world, hold public managing a project. Subsequently, they presented their sector jobs, largely due to the stability of such jobs and business plans to bankers and experts to get feedback. related benefits. Students were given training and time to research im- plementation, estimate financials and build networks. But the program did boost students’ self-reported In the next phase, students were assigned a personal business skills... private-sector coach and were supervised by a univer- sity professor to finalize their business plan. Students One immediate goal of the program was to give stu- were expected to participate in 8 coaching sessions. Af- dents the technical and business know-how they ter graduating, the students could enter their plan in a competition for seed funding. 41 percent of students did not complete the full program, a percentage that is high but consistent with other training programs.* About 67 percent of students finished the program’s first module, which was business training at the local employment office, and 59 percent completed both the business training and the coaching. Students who had a project idea when they applied for the program were more likely to complete it. Those who dropped out were more likely to be male students or students enrolled in economics or another business-related program. Researchers hypothesized that those already studying business may have felt that the program had needed to be entrepreneurs. Seventy-seven percent of less to add than students coming from other subject participants reported knowing how to write a business fields. Anecdotal evidence indicated that some stu- plan, compared with 45 percent in the control group. dents didn’t receive the right information about the Participants also reported a 10 percentage point in- training or coaching, causing them to drop out. crease in practical, business experience—a 27 percent increase over the control group. The entrepreneurship track did not promote higher quality jobs for graduates. …and students in the program had larger business—related networks. Students who went through the program were not any more likely to work longer hours, earn more money, Program participants were more likely to know an entre- or be covered by social security, compared with those preneur and a banker, but were less likely than those in who didn’t enter the program. The program did in- the control group to seek advice from a professor to de- crease the so-called reservation wage for private sector velop a new project idea. Those on the entrepreneurship jobs—which is the lowest wage someone will accept track also were marginally more likely to be registered at to take a job. However, there was no corresponding employment offices and more likely to know an employ- increase in the reservation wage for a public sector job. ment agent, though they were just as likely to use an em- This likely reflects the value with which people in Tu- ployment agent as graduates from the control group. *Groh, M., N. Krishnan, McKenzie, D. and T. Vishwanath (2012). “Soft skills or hard cash ? the impact of training and wage subsidy programs on female youth employment in Jordan�, Policy Research Working Paper No. 6141, World Bank, Washington D.C. Those who participated in the entrepreneurship that behavioral skills are malleable among youth and track also were more likely to have some that there may be some potential trade-offs in building behavioral skills linked to success as an behavioral skills for self or salaried employment. entrepreneur versus success in salaried jobs. But not all. Still, when it came to feeling hopeful about their future, participants were much more optimistic Based on measures of personality, participants were and more confident in their ability to obtain found to be more extroverted and less agreeable than credit. But they weren’t any more likely to have the control group. This is in line with findings* sug- gotten credit. gesting that agreeableness is negatively associated with occupations such as business professionals or managers. Students assigned to the entrepreneurship track were However, those in the entrepreneurship track also were more optimistic about their overall prospects in the labor less conscientious and showed lower emotional stabil- market, compared to those in the control group. They ity than those in the control group, both of which are also were more confident in their ability to access credit – viewed as important to succeeding in life. One explana- but they were not any more likely than the control group tion for this may be that the experience of writing an to know how to apply for credit it or to have been quali- academic thesis, which is what the control group had fied for credit. And the majority of graduates in the treat- to do, may be more effective at shaping certain skills ment group reported that lack of access to credit was the than entrepreneurship training. The results both show biggest problem in terms of starting their own business. *Cobb-Clark, D. A. and M. Tan (2010). “Noncognitive skills, occupational attainment, and relative wages.� Labour Economics 18(1). Conclusion The entrepreneurship track was introduced in academic promote entrepreneurship. The public employment of- year 2009/10 and is currently in its fourth year of imple- fice, which also has a mandate to assist in supporting self- mentation. Since its inception, the program has been ex- employment, is currently working with the World Bank panded to Master’s and engineering students. The evalu- to address other constraints that program beneficiaries ation results have been useful in showing that additional face by, among other things, promoting entrepreneurship accompanying measures are needed to more effectively support activities for the post-graduation period. The Human Development Network, part of the World Bank Group, supports and disseminates research evaluating the impact of development projects to help alleviate poverty. The goal is to collect and build empirical evidence that can help governments and development organizations design and implement the most appropriate and effective policies for better educational, health and job opportunities for people in developing countries. For more information about who we are and what we do, go to: http://www.worldbank.org/sief. This Evidence to Policy note series is produced with the generous support of SIEF. THE WORLD BANK, HUMAN DEVELOPMENT NETWORK 1818 H STREET, NW WASHINGTON, DC 20433 Produced by Office of the Chief Economist, Human Development Network, Communications/Aliza Marcus amarcus@worldbank.org For more information about this evaluation, contact Patrick Premand at ppremand@worldbank.org