In Simple Words
Think of an assistant baker who bakes $100 worth of bread every day but is only paid $30 in pocket money. The $70 difference is the extra value the bakery owner keeps to cover the cost of showing the assistant how to bake and supervising their work.
Firms offering apprenticeship places in Cote d Ivoire
- No formal apprentice placement assigned
- Group used for comparison
- Formal apprentice placement assigned
- Net work value 21380 FCFA higher monthly
Short-term firm outcome for apprentices who joined after randomization. Owners valued their work; employer payments were subtracted. This is not firm profit.
See source →Research question
Informal enterprise owners may underpay apprentices relative to their productive output to compensate for on-the-job instruction and supervision costs. Determining whether apprentices pay for their training requires measuring the wedge between their gross work value and total monetary compensation.
Participants
N = 674 informal micro and small enterprise owners evaluated at midline across 7 urban localities in Côte d'Ivoire.
Study Design
Enterprise-level aggregation comparing replaced casual worker cost (gross work value) against total wage/allowance bill across all newly entered apprentices.
Results
Host enterprise net value of work performed by apprentices increased by 21,380 FCFA per month (p = 0.0003), more than doubling the control group mean of 19,230 FCFA per month, while firm wage bills did not significantly rise (+4,391 FCFA, p = 0.177).
Takeaway
Compute the net value of trainee work by subtracting total employer compensation from the estimated market cost of hiring casual labor for identical tasks.