Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City

Do search frictions contribute to labour market exclusion in developing countries? To answer this question, we run a field experiment in a congested African city, involving a large sample of young individuals who live outside the urban centre: a group largely excluded from the formal labour market. We focus on two key mechanisms for labour market exclusion: spatial barriers and informational barriers. To test these mechanisms, one group of subjects receives a transport subsidy; another group participates in a workshop, where we provide formal skills certification and training to make effective job applications. We find that both treatments help young job-seekers get better jobs – more stable and more formal – and that effects are strongest for the most disadvantaged job-seekers. The magnitude of the effects is large. For example, the job application workshop reduces by about 20 percent the gap in permanent employment between younger and older workers. These results highlight the importance of spatial and informational constraints. They also show that low-cost interventions that relax these constraints can have large impacts on labour market inclusion in developing countries.