Probabilistic Job Offer Instrument

In Simple Words

Imagine a raffle where job seekers are handed lottery tickets that offer different winning probabilities for a temporary paid job. Instead of picking workers based on talent or enthusiasm, the random probability lottery decides who gets work experience. This acts like a roll of the dice that forces work experience onto randomly selected individuals, allowing researchers to measure wage growth without confounding worker ability.

Research question

Measuring the true economic return of work experience is confounded because workers who acquire jobs often possess unobservable noncognitive skills or motivation. Randomly assigning probabilities of temporary employment isolates exogenous variation in short-term work experience to establish causal impacts on future labor market outcomes.

Participants

N = 268 male youth job seekers (aged 18+, secondary school educated) in Lilongwe, Malawi, with N = 227 successfully re-interviewed at 9-month follow-up.

Study Design

Randomized Controlled Trial (RCT) utilizing Instrumental Variables (IV), assigning random job offer probabilities (0%, 1%, 5%, 50%, 75%, and 100%) stratified by baseline ability quintiles and recruiter history.

Results

The probabilistic job offer assignment strongly predicts short-term employment acquisition with a first-stage F-statistic of 76.36. Assigning 50%, 75%, or 100% probabilities increases job acquisition by 40.2, 56.8, and 83.7 percentage points respectively (p < 0.01).

Takeaway

Structure pilot active labor market evaluations with probabilistic selection lotteries to construct valid instrumental variables for wage effect identification.

Read alongside the research

Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Follow-up

Collecting more information about participants later in a study to see what has happened to them. The term can also mean the length of time researchers keep track of them.

ExampleResearchers interview the same workers three months after a programme ends. That later interview is a follow-up.

GET-IT glossary · Follow-up ↗Read more about follow-up →

Baseline

The starting measurements in a study. Researchers use these to compare what participants were like at the start with what happens later.

ExampleBefore a training programme starts, researchers measure workers’ earnings. That first measurement is the baseline.

GET-IT glossary · Baseline characteristics ↗Read more about baseline →

Percentage points

The difference between two percentages.

ExampleA rise from 40% to 50% is 10 percentage points. Relative to the starting value, that is a 25% increase.

Office for National Statistics · Percentages ↗Read more about percentage points →

Randomized controlled trial

A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.

ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.

GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →

Related findings

• Advance Notification Anticipation Effect →Labour & employment

  Imagine being told weeks in advance that a strict inspector will audit your progress on a specific date. To avoid the stress and potential penalties of the audit, you work harder and accept acceptable options earlier to resolve the situation before the audit date arrives.

• Auxiliary Program Decoupling →Labour & employment

  Imagine testing whether signing a fitness pledge helps people exercise. If participants who sign the pledge also receive free personal training sessions, it is impossible to know whether the pledge itself worked or the extra coaching produced the results.

• Causal Wage Returns to Short-Term Work Experience →Labour & employment

  Gaining a brief period of formal work experience functions like a temporary structural bridge over a river. Even if the job lasts only a few days, it gives a worker immediate hands-on practice with real-world tasks and transferable skills, providing subsequent private employers with verifiable proof of workforce productivity beyond mere academic credentials.

• Employability-Driven Effect Heterogeneity →Labour & employment

  Think of an integration agreement like a mandatory study schedule given to students. High-performing students who would study effectively on their own derive no benefit and may feel needlessly restricted, whereas struggling students who lack momentum get the structure and external push needed to achieve results.