Are Small Firms Labor Constrained? Experimental Evidence from Ghana

Morgan Hardy and Jamie McCasland

American Economic Journal: Applied Economics, 2023, vol. 15, issue 2, 253-84

Abstract: We report the results of a field experiment that randomly placed unemployed young people as apprentices with small firms in Ghana and included no cash subsidy to firms (or workers) beyond in-kind recruitment services. Treated firms experienced increases in firm size of approximately half a worker and firm profits of approximately 10 percent for each apprentice placement offered, documenting frictions to novice hiring. We interpret the program as providing a novel worker screening technology to firms, as (voluntary) worker participation included nonmonetary application costs, echoing the widespread use of an entrance fee mechanism for hiring apprentices in the existing labor market.

JEL-codes: D22 J13 J23 L25 M51 M53 O14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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DOI: 10.1257/app.20200503

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