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Entrepreneurship Training and Self-Employment Among University Graduates: Evidence from a Randomized Trial in Tunisia

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Entrepreneurship Training and Self-Employment Among University Graduates: Evidence from a Randomized Trial in Tunisia A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Premand, Patrick; Brodmann, Stefanie; Almeida, Rita K.; Grun, Rebekka; Barouni, Mahdi Working Paper Entrepreneurship training and self-employment among university graduates: Evidence from a randomized trial in Tunisia IZA Discussion Papers, No. 7079 Provided in Cooperation with: IZA – Institute of Labor Economics Suggested Citation: Premand, Patrick; Brodmann, Stefanie; Almeida, Rita K.; Grun, Rebekka; Barouni, Mahdi (2012) : Entrepreneurship training and self-employment among university graduates: Evidence from a randomized trial in Tunisia, IZA Discussion Papers, No. 7079, Institute for the Study of Labor (IZA), Bonn This Version is available at: http://hdl.handle.net/10419/69343 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu IZA DP No. 7079 Entrepreneurship Training and Self-Employment among University Graduates: Evidence from a Randomized Trial in Tunisia Patrick Premand Rebekka Grun Stefanie Brodmann Mahdi Barouni Rita Almeida December 2012 DISCUSSION PAPER SERIES Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor Entrepreneurship Training and Self- Employment among University Graduates: Evidence from a Randomized Trial in Tunisia Patrick Premand Rebekka Grun World Bank World Bank Stefanie Brodmann Mahdi Barouni World Bank CERES, Republic of Tunisia Rita Almeida World Bank and IZA Discussion Paper No. 7079 December 2012 IZA P.O. Box 7240 53072 Bonn Germany Phone: +49-228-3894-0 Fax: +49-228-3894-180 E-mail: [email protected] Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. IZA Discussion Paper No. 7079 December 2012 ABSTRACT Entrepreneurship Training and Self-Employment among University Graduates: Evidence from a Randomized Trial in Tunisia* In economies characterized by low labor demand and high rates of youth unemployment, entrepreneurship training has the potential to enable youth to gain skills and create their own jobs. This paper presents experimental evidence on a new entrepreneurship track that provides business training and personalized coaching to university students in Tunisia. Undergraduates in the final year of licence appliquée were given the opportunity to graduate with a business plan instead of following the standard curriculum. This paper relies on randomized assignment of the entrepreneurship track to identify impacts on labor market outcomes one year after graduation. The analysis finds that the entrepreneurship track was effective in increasing self-employment among applicants, but that the effects are small in absolute terms. In addition, the employment rate among participants remains unchanged, pointing to a partial substitution from wage employment to self-employment. The evidence shows that the program fostered business skills, expanded networks, and affected a range of behavioral skills. Participation in the entrepreneurship track also heightened graduates’ optimism toward the future shortly after the Tunisian revolution. JEL Classification: O12, J24, I21, L26 Keywords: youth employment, self-employment, entrepreneurship training, program evaluation, behavioral skills, soft skills Corresponding author: Rebekka Grun The World Bank 1818 H Street Washington, DC 20433 USA E-mail: [email protected] * We thank Luca Etter for invaluable support and co-leadership during the implementation phase of the program, as well as Maaouia Ben Nasr and Leila Baghadi for excellent support during follow-up data collection. This study would not have been possible without the support of Ali Sanaa, Rached Boussema, Fatma Moussa and multiple staff in the Tunisian Ministère de Formation professionnelle et de l’Emploi (MFPE) and the Ministère de l’Enseignement supérieur et de la Recherche scientifique (MERS). We thank Hosni Nemsia and his team for effective data collection. We acknowledge the financial support of the Spanish Impact Evaluation Trust Fund and of the Gender Action Plan at the World Bank. We are very grateful for useful comments provided by participants in the Tunis World Bank workshop on activation, as well as seminar participants at the World Bank and IZA. We also thank colleagues who provided comments including Harold Alderman, Najy Benhassine, Roberta Gatti, David Margolis, Daniela Marotta, Eileen Murray, Berk Ozler, Bob Rijkers and Insan Tunali. 1. Introduction Youth employment is at the center of the policy agenda around the world. The 2013 World Development Report emphasizes that employment not only matters for individuals’ welfare, but also for social cohesion (World Bank, 2012a). The Arab Spring highlighted the dramatic consequences of high youth unemployment in countries such as Egypt or Tunisia. Throughout most of the Middle East and North Africa, youth unemployment rates are particularly high among university graduates, and policymakers often look for innovative and effective policies to facilitate the transition of youth from education to work (World Bank, 2012b). In economies characterized by constrained labor demand from the private sector and high rates of youth unemployment, entrepreneurship-support interventions targeting students are promising policy options. Entrepreneurship training has the potential to enable graduates to gain skills and create their own jobs, as well as possibly also better align their skills with private employers’ needs. Some OECD countries are providing entrepreneurship education to university students (Oosterbeek et al., 2008). Yet despite the potential of entrepreneurship training, evidence on how such programs shape students’ skills and facilitate entry into self-employment remains thin. Tunisia has long experienced high unemployment, particularly among new university graduates. For instance, 46 percent of graduates of the 2004 class were still unemployed eighteen months after graduation (MFPE and World Bank, 2009). Recent data show that graduates’ unemployment has been rising. Based on the Tunisian Labor Force Survey, unemployment among youth holding a university degree increased from 34 percent in 2005 to 56 percent in 2011. In this context, Tunisia has attempted various reforms aiming to promote employability or self-employment among university graduates. This paper presents results from a randomized control trial evaluating a unique reform: the introduction of an innovative entrepreneurship track in the university curriculum. In 2009, Tunisia mainstreamed a new entrepreneurship track into the applied undergraduate (licence appliquée) curriculum. Students enrolled in the last year of their licence appliquée were invited to apply to the entrepreneurship track, which entailed business training as well as 2 personalized coaching sessions.1 Students could then graduate by writing a business plan instead of a traditional undergraduate thesis. Upon graduation, participants were invited to submit their business plans to a competition (concours des meilleurs plan d’affaires “entreprendre et gagner”). The fifty winners of the competition became eligible to receive seed capital to establish their business. In this paper, we identify the impact of the entrepreneurship track on beneficiaries’ labor market outcomes by relying on randomized assignment. Half of the 1,702 students who applied to the program in 2009/10 were randomly
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