Making Entrepreneurs: Long Term Returns to Training Youth in Business Skills

We study the medium and long term impacts of Skills for Effective Entrepreneurship Development (SEED), a 3-week entrepreneurship training program for secondary school students in Uganda. The mini-MBA, modeled after business school curricula, was implemented as a randomized field experiment with a nationally representative sample of 4,402 youth. After four years, the training improved both hard and soft skills. SEED graduates became more effective negotiators and communicators and exhibited improved self-efficacy, stability, plasticity, and stress management. In the medium run, treated youth were more likely to start enterprises and more successful in ensuring their survival, thereby gaining greater entrepreneurial experience. Their ventures were also of higher quality: more likely to be formal, have employees, be in collaboration with other entrepreneurs, and use effective business management practices. With 52% of the sample still enrolled in post-secondary education, we find suggestive evidence that businesses led by the treatment groups performed better. After nine years, business ownership converged between treatment and control groups as control ownership rates doubled. However, SEED graduates maintained their edge in terms of business quality and operated firms with 20% higher revenues and 16% higher profits, without corresponding increases in capital or labor inputs, consistent with higher total factor productivity. Entrepreneurial success was achieved through the adoption of better business practices and experimentation, with soft skills related to entrepreneurial mindset playing a complementary role. SEED generated high returns on investment: the present discounted values of SEED-induced business and total earnings equal 20 and 27 times program costs, respectively.