SEMINARIO 26/09 – MARÍA HERNÁNDEZ DE BENITO (CUNEF UNIVERSIDAD) – CAPITAL, CAPABILITY OR CONFIDENCE: EXPERIMENTAL EVIDENCE ON YOUTH ENTERPRENEURSHIP IN KENYA

Información

Youth employment is among the most pressing policy challenges in low- and middle-income countries, where most young people work outside formal wage jobs and cycle between underemployment and low-return self-employment. The challenge is most acute in Sub-Saharan Africa: one in five first-time job seekers worldwide is African today, a share projected to rise to one in three by 2050. Yet evidence on the relative importance of capital, skills, and behavioral constraints—and on how to target support to those most likely to benefit—remains limited. We address these questions through a randomized controlled trial embedded in the Kenya Youth Employment and Opportunities Project, a national government program, which assigned 9,380 disadvantaged youth across 15 counties to business grants, business development services (BDS), behavioral interventions, or combinations thereof. Grants of US$360 raised business ownership by 16 percentage points, with large gains in sales, profits, and subjective well-being that persisted over three years. BDS alone had no average effect but increased sales and profits among new female entrants. Combining grants with BDS did not improve on grants alone, pointing to capital as the binding constraint. Prior to randomization, all applicants took a novel Entrepreneurial Aptitude Test (EAT), which we use to study heterogeneity and assess whether low-cost psychometric screening can improve the targeting of entrepreneurship support at scale.

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