Making Entrepreneurs: Returns to Training Youth in Hard Versus Soft Business Skills
We study the medium-term impacts of the Skills for Effective Entrepreneurship Development (SEED) program, an innovative in-residence 3-week mini-MBA program for high school students modeled after western business school curricula and adapted to the Ugandan context. The program featured two separate treatments: the hard-skills MBA features a mix of approximately 75% hard skills and 25% soft skills; the soft skills curriculum has the reverse mix. Using data on 4400 youth from a nationally representative sample in a 3-arm field experiment in Uganda, the 3.5 year follow-up demonstrated that training was effective in improving both hard and soft skills, but only soft skills were directly linked to improvements in self-efficacy, persuasion, and negotiation. The skill upgrade was rewarded in substantially higher earnings; 32.1% and 29.8% increases in earnings for those who attended hard- and soft-training, respectively, most of which, was generated through self-mployment. Furthermore, youth in both groups were more likely to start enterprises and more successful in ensuring their businesses' survival. The program led to significantly larger profits (24.2% and 27.2% for hard- and soft- treatment arms respectively) and larger business capital investments (38.4% and 32.6% for SEED hard and SEED soft, respectively). Both SEED curricula were very cost-effective; two months worth of the extra earnings caused by the training alone would exceed the cost of the program. These benefits abstract from the job- and business-creation benefits of the program, which were substantial: relative to the control group, SEED entrepreneurs created 985 additional jobs and 550 new businesses.
We gratefully acknowledge financial support from CEDIL/UKaid, ILO, Jacobs Foundation, JPAL PPE program, USAID, and Wellspring Philanthropic Fund. We are also grateful to Fernando Saltiel, David McKenzie, Susana Puerto, as well as seminars and conferences participants at Berkeley, LSE, World Bank, IADB, RIDGE, and HEC Paris. We are particularly grateful to Educate! and Meghan Mahoney. Ada Kwan, Vivian Lo, Aisling Scott, Pooja Suri, and Nicole Perales provided excellent research assistance. We gratefully acknowledge Nathan Fiala's contributions to early stages of the design and survey instruments. The experiment described in this paper is registered at the AEA RCT Registry under the code AEARCTR-0002134 and the Uganda National Council of Science and Technology (UNCST, SS4310). The protocol was granted IRB approval by the IPA Institutional Review Board (IPA IRB, 9850) and the Mildmay Uganda Ethics Review (MUREC, 0104 2017). The authors declare that they have no financial or material interests in the results discussed in this paper. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.