The effects of industrial work on income and health: Experimental evidence from Ethiopia

from Health Economics at on October 30, 2016 at 11:09AM

Activists criticize the poor wages and working conditions in industrial firms. Others counter that these industrial jobs offer wage premiums and steady hours. We worked with five Ethiopian industrial firms to randomize entry-level applicants to one of three treatment arms: a job offer; a control group; or an improved self-employment option, $300 grants plus business training. Industrial jobs offered more hours than the informal sector but lower wages, and had little impact on incomes after a year. Most applicants quit the sector quickly, finding industrial jobs unpleasant and risky. Indeed, serious health problems rose one percentage point for every month of industrial work. Meanwhile, the grants stimulated self-employment, raising earnings by 33%. On balance, these Ethiopian industrial jobs appear to be unremarkable low-skill employment options, with serious health risks, that poor people take to cope with bad shocks and avoid when informal employment options are available.