What impact does improving applicants’ abilities to show their employment skills have on recruitment and productivity?

Professor Stefano Caria has recently featured in the VoxDevTalks podcast series, discussing new work in the Abdul Latif Jameel Poverty Action Lab (J-PAL) Policy Insights series on reducing barriers to employment in low and middle income countries.

J-PAL’s Policy Insights programme aims to bring together lessons emerging from multiple academic studies and publish policy briefs to help inform decision-making in governments, NGOs, firms, and funders working to address similar challenges.

Hosted by Tim Phillips, the episode, “Helping jobseekers signal their skills” also features Professor Marianne Bertrand of Chicago Booth School. Professor Bertrand and Professor Caria are co-chairs of the J-PAL Labor Markets sector, responsible for developing Policy Insights work in this area.

In the podcast, Professor Caria and Professor Bertrand discuss the key insights from Improving job seekers’ employment and earnings through credible skills signals, published in November. Identifying a “major market failure,” Professor Bertrand explains that matching skills to jobs is not straightforward. Employers don’t want to hire someone who lacks the skills for the role; but they also don’t want to hire someone with greater skills than are required as that person is likely to move on quickly once their skills are publicly demonstrated.

It is also the case that job seekers, especially young people, don’t always find it easy to assess their own skills against those set out in job descriptions.

Strategies to address this might include paying inexperienced workers less; investing in training; or relying on referrals from friends and families of existing workers. Professor Bertrand notes that “referrals have advantages but also some clear limitations,” warning that less-well-networked groups like women and younger workers can lose out.

Professor Caria adds that “for young people especially, who are trying to enter the labour market, the idea that unless they have the right connections they’re not going to land the job can be extremely discouraging.”

The policy brief reviews fourteen randomized evaluations to set out the impact of one relatively low-cost intervention – enabling job-seekers to demonstrate their skills in a reliable and standardised way. For example, they could get a certificate from a recognised local institution such as a college or an NGO after taking part in a skills evaluation workshop.

Professor Caria concludes: “The evidence seems clear that such programmes help job-seekers better understand their own skills, so they apply for more appropriate roles, and they help employers make better hiring decisions. Job-seekers who can demonstrate their skills tend to earn more, and they tend to stay in role longer, which is a benefit to the firm and helps to grow the economy overall.”

• Listen to the podcast: VoxDev Development Economics / Helping jobseekers signal their skills
• Read the policy brief: Improving job seekers’ employment and earnings through credible skills signals | The Abdul Latif Jameel Poverty Action Lab
• Read an academic literature review by Professor Caria and Professor Kate Orkin which covers these interventions: Barriers to Search & Hiring in Urban Labour Markets | VoxDev