Collaborative Research: Experimental Evidence on the Returns to Vocational Education in Kenya

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Project Summary: "Experimental Evidence on the Returns to Vocational Education in Kenya"Youth unemployment is among the most pressing social and economic problems facing less developed countries, yet too little is known about how best to smooth the school-to-work transition or boost human capital for those not on the academic schooling track. Vocational education is one promising avenue for addressing the problem, especially through the dynamic private vocational sector. This project will study impacts of a vocational education voucher program among Kenyan youth, using a randomized design together with an innovative panel dataset. This is the first (to the investigators' knowledge) randomized evaluation of a vocational education intervention in Africa and builds on ten years of detailed information in the Kenyan Life Panel Survey (KLPS) dataset.The intellectual merit of the proposed research is its reliance on a credible research design and unique dataset to address at least four central questions in the fields of development, labor and public economics:(1) What are the returns to education in Africa? The proposed project will estimate the impact of vocational education on formal sector employment, labor market earnings, entrepreneurship decisions, migration (within Kenya and abroad), remittances and fertility. Approximately 2,160 out-of-school Kenyan youths, drawn from the KLPS dataset, applied for vocational education tuition vouchers in the Kenyan study district. Half of these individuals were randomly selected to receive vouchers, with the non-winners serving as the control group. The project will also leverage the extensive (pre-intervention) individual-level data in KLPS to estimate heterogeneous returns to schooling by cognitive ability, socioeconomic status, and gender.(2) Are returns to vocational education higher in the private training sector? Among the voucher winners, a random half received vouchers that can be used only in government-supported training centers, while the other half received unrestricted vouchers that could be used in either public or private centers. The comparison of outcomes between the restricted (government only) and unrestricted voucher winners will illuminate any additional returns to access to private centers.(3) How are the "returns" to educational investments spatially distributed? The unusual KLPS panel dataset, which tracks respondents wherever they move within East Africa, will also provide new insights into how human capital investments affect out-migration decisions and remittances back to the sending area, shedding light on whether vocational education reduces or amplifies inter-regional economic disparities.(4) What factors affect the demand for vocational education? This project will produce examine experimental evidence on both the role of (i) price (through the tuition voucher experiment above) and (ii) information about average returns to vocational schooling, in determining demand. A baseline information experiment provided additional information (including basic statistics and a video) to a randomly chosen half of program applicants, highlighting (a) the higher earnings of vocational training recipients (in a cross-sectional analysis) and (b) the higher earnings of those who receive training in male-dominated trades (e.g., automobile mechanics) relative to female-dominated trades (e.g., seamstresses). The investigators will examine whether this information and encouragement affected the decision to enroll in a vocational education center and the type of course chosen. The preliminary results show large impacts of this information treatment on the enrollment decisions and course choices of Kenyan females, with a significant shift towards male-dominated courses.A key broader impact of the proposed project is the training of Economics Ph.D. students based in the U.S. in field data collection methods and applied econometrics. Another broader impact is the possibility of influencing public policy in less developed countries, and especially in Africa. Vocational education is seen as one of the most promising avenues for addressing the pressing problem of youth unemployment, and Kenya and many other African governments are currently expanding public programs in this sector. This project will provide rigorous evidence on the demand for and impacts of vocational education. The research team plans to continue actively disseminating results to development policymaking through this research, as they have with previous projects. The PIs have extensive data collection experience and policy contacts in Kenya dating back over a decade and work with a highly effective team of enumerators.