Research
Job market paper: Failed Promises of a Wage Subsidy: Youth and South Africa’s Employment Tax Incentive PDF
Abstract
Young people face unemployment rates two to four times those of older workers. Youth unemployment is particularly severe in South Africa, where 52 percent of those between ages 15 and 24 are unemployed. To address this issue, South Africa has introduced a subsidy that offsets firms' costs for wages paid to young workers hired after October 2013. Firms can receive tax credits that cover up to half the wages paid to a young worker. While similar wage subsidies have been used in other middle-income countries, there is little evidence about their efficacy, especially when implemented at a national scale. I estimate the policy's effect using a difference-in-differences strategy based on age-eligibility restrictions and the start date. During the first year of implementation, being eligible for the subsidy did not increase employment for age-eligible workers relative to a slightly older cohort. My estimates rule out effects as small as 1 percentage point. This limited result comes despite widespread utilization of the subsidy, which was extended twice past its expiration date. As the decrease in firms' costs did not induce them to hire more young workers, attention should be focused on other constraints that prevent such workers from being employed, such as their skills or labor market regulations.
Cheap Talk and Coordination in the Lab and in the Field: Collective Commercialization in Senegal PDF
Joint with Tanguy Bernard and Angelino Viceisza
Coordination is central to social interactions. Theory and conventional lab experiments suggest that cheap talk/communication can enhance coordination under certain conditions. Two aspects that remain underexplored are the interaction between the number of players (group size) and communication and how existing findings might play out in the field. We address both of these by studying a typical naturally-occurring setting that requires coordination; that is, one where members of agricultural cooperatives seek to jointly sell their output. Combining artefactual/lab-in-the-field experiments (LFEs), natural field experiments (RCTs), surveys, and cooperative records, we find that (1) revealing farmers' intended sales (i.e., cheap talk/communication) yields enhanced collective commercialization (i.e., coordination), particularly in larger groups; (2) such cheap talk may lead to higher incomes for small-scale farmers; (3) participants transfer learning from the LFEs, thus affecting subsequent behavior in the RCTs (i.e., the day-to-day environment). Our results contribute to existing literature by highlighting the potential for cheap-talk institutions to (1) boost coordination, particularly in settings with greater strategic uncertainty (e.g., larger farmer cooperatives), and (2) promote collective entrepreneurship and development.
Presented at NEUDC 2016, ABCA 2017, NBER TRA 2019, SEEDEC 2019
Internal Migrants' Ethnic Capital and Labor Market Outcomes in South Africa
Work in progress