Broad-Based Wage Distribution CDF Shift
RCTClinical Trial
Evaluating whether wage increases from active labor market interventions reflect broad earnings gains across worker cohorts or are skewed by extreme outlier earnings among a few top individuals is critical for policy evaluation.
Picture this
A short-term work experience intervention acts like raising the water level in an entire harbor rather than lifting a single boat. It shifts the entire cumulative distribution curve of daily wages to the right, increasing earnings opportunities across low-, medium-, and high-earning workers alike.
What the evidence says
Wage gains persisted consistently across all 8 post-intervention months ($1 to $6 per day increase across individual months), displaying a rightward shift of the entire daily wage CDF rather than earnings concentration among a few top earners.
- Who was studied
- N = 227 urban Malawian male job seekers tracked over an 8-month follow-up period in Lilongwe, Malawi.
- How
- Instrumental variables (IV) estimation combined with cumulative distribution function (CDF) analysis comparing post-intervention daily wage distributions across lottery job, earned job, and control groups.
What to do
Plot cumulative distribution functions of wage outcomes when evaluating employment interventions to confirm that wage growth is broad-based across all income quantiles.
From the source
"These wage impacts do not appear to be concentrated among a few individuals; rather, we see a distributional shift among those acquiring the short-term work experience opportunity."
Employment Exposure: Employment and Wage Effects in Urban Malawi