The Impact of Social Insurance Reform on Skill Composition and Worker Turnover: Evidence from Ethiopia

Arjun S. Bedi, Admasu Shiferaw, Måns Söderbom and Getnet Alemu Zewdu

Journal of Development Studies, 2026, vol. 62, issue 2, 218-239

Abstract: This paper examines the effects of a major social insurance reform program in Ethiopia on the skill-composition of workers and gross worker flows at the establishment level. The reform extended an existing pension and disability scheme, which covered the public sector through mandatory employer and employee contributions, to permanent employees of formal private sector establishments. Using a difference-in-differences framework on survey data from Ethiopian manufacturing establishments, we find a three-percentage point reduction in the share of high-skill workers in treatment establishments following the reform. The reform also resulted in a significant reduction in the worker separation rate in treatment establishments, largely explained by a decline in the quit rate among low-skill workers. This decline explains the composition effect and suggests a favorable perception of the reform’s benefits among low-skill workers.

Date: 2026
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DOI: 10.1080/00220388.2025.2510638

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