Browsing by Author "Bassi, Vittorio"

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    The impact of COVID-19 on Ugandan firms
    (International Growth Center (IGC) Uganda, 2021) Alfonsi, Livia; Bassi, Vittorio; Manwaring, Priya; Ngategize, Peter; Oryema, John; Stryjan, Miri; Vitali, Anna
    The COVID-19 pandemic came at an enormous cost to both developed and developing countries, and Uganda is no exception to this. Though the country has so far been shielded from the worst in terms of health impact, measures put to curb the spread of COVID-19 and the sharp global downturn in economic activity have hit the economy hard. For instance, severe limitations on international transport have reduced exports and tourism and restricted access to key industrial inputs. At the same time, the collapse in the world economy has reduced aggregate demand and lowered remittances from Ugandans living abroad. Lockdown measures between March and May 2020 compounded economic difficulties by preventing people from working and limiting internal mobility. As a result of the global crisis, GDP growth slowed from 6.8% in FY 2018/19 to 2.9% in FY 2019/20, and is expected to grow at a similar level in FY 2020/21 (World Bank, 2020).
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    The impact of the COVID-19 lockdown on SMEs and employment relationships in Uganda
    (International Growth Center (IGC) Uganda, 2021) Bassi, Vittorio; Porzio, Tommaso; Sen, Ritwika; Tugume, Esau
    During 2020, governments in many developing countries introduced severe restrictions on economic activity and mobility to curb the spread of COVID-19. In Uganda, public transport and non-essential businesses were closed from early April to June 2020. These policy brief reports on the results from a phone survey of representative sample of SMEs and their workers conducted in late2020 to study how SME activity and employment relationships were impacted by a prolonged lockdown. The findings show the strict three-month lockdown resulted in significant increase in firm closures, but these closures were by and large temporary. They also uncover substantial resilience of informal labour relationships to the shock. Although most workers were let go during the lockdown and 15% of workers migrated to other locations, 76% of the furloughed employees were recalled back to work by the same employer after the lifting of the lockdown restrictions. Even though most firms reopened, and considerable shares of workers were re-hired, this has been accompanied by substantial income losses: firms are now earning 30% lower revenues and workers are earning 30% less incomes than before the lockdown. The results suggest a key role for liquidity and wage support policies to help impacted firms and workers.
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    The Labor Market Impacts of Soft Skills Certificates
    (Growth and Labor Markets in Low Income Countries Programme, 2018) Bassi, Vittorio; Nansamba, Aisha; Rasul, Imran
    Unemployment and underemployment are key policy challenges in the developing world, and particularly in Africa, where the number of unemployed individuals is projected to increase by 1.1 million per year, and where the number of workers earning less than $3.10 per day is expected to rise by 3.9 million in 2018 alone [ILO 2017]. Understanding which factors contribute to high unemployment levels and low wages is thus of primary importance for informing the design of development policies in Africa and elsewhere. In this policy brief we report the findings from a labor market intervention we conducted in Uganda to study whether difficulties workers face in signaling their soft skills to potential employers reduce the employment opportunities of young workers and contribute to their low wages. Our headline results show that workers receiving a certificate on soft skills did not increase their probability of employment, but earned 11% more while employed in the two years post intervention.
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    SCREENING AND SIGNALLING NON-COGNITIVE SKILLS: EXPERIMENTAL EVIDENCE FROM UGANDA∗
    (Oxford University Press, 2022-02) Bassi, Vittorio; Nansamba, Aisha
    We study how employers and job seekers respond to credible information on skills that are difficult to observe, and how this affects matching in the labour market. We experimentally vary whether certificates on workers’ non-cognitive skills are disclosed to both sides of the market during job interviews between young workers and small firms in Uganda. The certificates cause workers to increase their labour market expectations, while high-ability managers revise their assessments of the workers’ skills upwards. The reaction in terms of beliefs leads to an increase in positive assortative matching and to higher earnings for workers, conditional on employment.
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    Tackling youth unemployment: Evidence from a labor market experiment in Uganda
    (Wiley, 2020-11) Alfonsi, Livia; Bandiera, Oriana; Bassi, Vittorio; Burgess, Robin; Rasul, Imran; Sulaiman, Munshi; Vitali, Anna
    We design a labor market experiment to compare demand- and supply-side policies to tackle youth unemployment, a key issue in low-income countries. The experiment tracks 1700 workers and 1500 firms over four years to compare the effect of offering workers either vocational training (VT) or firm-provided training (FT) for six months in a common setting where youth unemployment is above 60%. Relative to control workers, we find that, averaged over three post-intervention years, FT and VT workers: (i) enjoy large and similar upticks in sector-specific skills, (ii) significantly improve their employment rates, and (iii) experience marked improvements in an index of labor market outcomes. These averages, however, mask differences in dynamics: FT gains materialize quickly but fade over time, while VT gains emerge slowly but are long-lasting, leading VT worker employment and earning profiles to rise above those of FT workers. Estimating a job ladder model of worker search reveals the key reason for this: VT workers receive significantly higher rates of job offers when unemployed, thus hastening their movement back into work. This likely stems from the fact that the skills of VT workers are certified and therefore can be demonstrated to potential employers. Tackling youth unemployment by skilling youth using vocational training pre-labor market entry therefore appears to be more effective than incentivizing firms through wage subsidies to hire and train young labor market entrants.
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    Understanding productivity dispersion Evidence from a new survey of manufacturing firms in Uganda
    (International Growth Center (IGC) Uganda, 2019) Bassi, Vittorio; Muoio, Raffaela; Mutambi, Joshua; Porzio, Tommaso; Sen, Ritwika; Tugume, Esau
    There are large productivity differences across firms in developing countries, even within the same sector and region. Understanding what contributes to such differences in productivity is important for designing policies to help low productivity firms grow. This project implemented a representative survey of over 1,000 manufacturing firms in Uganda to quantify differences in productivity and understand what drives such differences. The key results from the survey are that: Mechanisation matters: machine usage is the primary factor associated with profitability; Small firms engage in an active firm-to-firm rental market for machines, which enables them to access high-capacity and expensive machines within semi-formal or informal clusters; and While the rental market partly relieves capital constraints, firms still report access to machines as an important challenge. As such, industrial policies facilitating mechanisation seem particularly promising. In particular, this survey suggests that policies should leverage the cooperative nature of firm networks and the existing rental market to increase mechanisation, which could include subsidising machines that can be shared by firms in the cluster.