Opportunity Cost of Vocational Training
RCTReview
Enrolling in full-time dual apprenticeship forces low-skilled youth to forgo immediate income from casual wage work and self-employment. Understanding youth participation constraints requires evaluating whether subsidies compensate for these short-term earnings losses.
Picture this
Think of a worker taking unpaid leave from a part-time job to attend a full-time certification program. Without a stipend to replace their lost daily wages, the worker cannot afford food and rent during the program, forcing them to drop out regardless of future pay raises.
What the evidence says
Short-term labor earnings in the treatment group fell by 10,494 FCFA/month (-25%, p < 0.001) due to reductions in wage work (-6,414 FCFA) and self-employment (-6,381 FCFA). The monthly program stipend of 10,213 FCFA fully offset these forgone earnings, resulting in zero net change in total short-term income.
- Who was studied
- N = 1,661 youth tracked at midline (20 months post-baseline) across 7 urban localities in Côte d'Ivoire.
- How
- Inversely propensity weighted RCT analysis comparing treatment and control group earnings across occupations.
What to do
Structure participant stipends to match or exceed lost casual labor earnings to eliminate short-term financial barriers during intensive training programs.
From the source
"The subsidy contributes to offset these losses in labor earnings, so that the program has no significant impact on youths' total earnings in the short-term."
Direct_and_Indirect_Effects_of_Subsidized_Dual_Apprenticeships.pdf