Barriers to Labour Market Efficiency in Low-Income Countries

Abstract

Chapter 2 investigates how to make it easier for firms and workers to find each other in LICs. Several GLM|LIC projects study constraints such as information and mobility barriers that are mechanisms for exclusion of the most disadvantaged. They also show that well targeted, low-cost interventions can have large impacts, improving both efficiency and equity in the labour market. A project in Ethiopia found positive effects of low-cost programmes designed to help reduce search costs and improve matching, including a soft skills certification programme and transport subsidies. The chapter also presents evidence from Uganda on the impact of improving firms’ knowledge about workers’ characteristics. The demand for labour and the cost of labour in Africa is analysed building on evidence from Ghana, while the effect of intra-firm wage disparities on productivity and absenteeism is discussed based on a novel RCT in India.