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Occupational choice of skilled workers in the presence of a large development sector: Evidence from Sierra Leone JAMELIA HARRIS DPHIL CANDIDATE, UNIVERSITY OF OXFORD JAMELIA.HARRIS@QEH.OX.AC.UK SEPTEMBER 2019 JAMELIA HARRIS - DPHIL CANDIDATE

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Occupational choice of skilled workers in the presence of a large development sector: Evidence from Sierra Leone

JAMELIA HARRIS DPHIL CANDIDATE, UNIVERSITY OF OXFORD JAMELIA.HARRIS@QEH.OX.AC.UK SEPTEMBER 2019

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Motivation

Observations:

  • Increased spending by national governments and international push for skills development (e.g.

World Bank, DfID, EU)…… but little formal job creation to absorb the expanding skilled workforce Pritchett, 2001; World Bank, 2013).

  • Increase in the skilled workforce, with a simultaneous skills gap being reported

Possible implications

  • Returns to education may not be as high as previously estimated
  • At the micro-level, happiness and well-being of skilled-labour is diminished due to low job-

satisfaction and motivation

  • Unemployment and unrests in LIC (Enria, 2018).

What are the aspirations and behaviour of skilled workers in the labour market?

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Labour markets in developing countries

Large informal sectors, labour supply decisions that are made by large households - and not just the individual worker, seasonality and holding multiple jobs, and uncertainty stemming from uninsured risks (Frolich and Haile, 2011). In addition to this, I hypothesise that the ongoing presence of the development sector affects aspirations, decisions and behaviour in the labour market. In this study, the development sector comprises those organisations whose primary objective is promoting economic and social development in the local country (save for the public sector), through policy, advocacy or implementation. This includes local NGOs, INGOs and donor

  • rganisations. In most cases, the source of funds is external: either bilateral or multilateral ODA
  • r private donations.

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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The development sector in LIC

ODA contribution to LICs (Source: World Bank Data)

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Sierra Leone as a Case Study

50 100 150 200 250

1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Net ODA received (% of central government expense) Net ODA received per capita (current US$) Net ODA received (% of GNI)

Onset of Ebola End of civil war war First major post-war democratic election

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Why Sierra Leone – relative importance of tertiary education increasing

5 10 15 20 25 30 35

2007 2008 2009 2010 2011 2012 2013 2014

PERCENTAGE FISCAL YEAR

Expenditure on tertiary as % of government expenditure on education (%) Expenditure on tertiary as % of total government expenditure (%) Government expenditure in tertiary institutions as % of GDP (%)

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Research Questions

  • 1. Do skilled job-seekers sort based on cognitive ability?
  • 2. Does the presence of the development sector matter for
  • ccupational choice?

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Data Collection (Aug – Dec 2017)

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Data Collection (Aug – Dec 2017)

  • Survey of 392 undergraduates who were about to graduate – survey completed

1-2 weeks before final exams.

  • Incentivised Raven’s Matrices to measure cognitive ability
  • Lab-in-field experiments (risk and time preferences using incentivised MPL,

pro-social behaviour using incentivised dictator games and a “state of the world” game from psychology). Hypothetical questions used to triangulate

  • Incentivised occupational choice - internships

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Measuring cognitive ability -Raven’s matrices

.

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Sample Characteristics

Variables Sample Proportion Female 0.3469 Live in East Freetown 0.4031 Originally from Freetown 0.4719 Has children 0.3061 Married 0.1122 Has financial dependents 0.4694 Interned 0.5944 in the public sector 0.2806 in the private sector 0.1888 in the development sector 0.1582 in self-employment 0.0255 Volunteer experience 0.6173

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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The model

Does cognitive ability predict occupational choice by sector? Three sectors (y variable): public sector, private sector and the development sector. 𝑄 𝑧 = 𝑘 𝑦𝑗 = 𝛾1 𝑏𝑐𝑗𝑚𝑗𝑢𝑧𝑗 + 𝛿𝑎𝑗 + 𝜁𝑗𝑘 Estimate using Multinomial Probit Model 𝑎𝑗 is a vector of controls that include measured preferences and socio-demographic factors.

➔ Measured preferences shown to be significant to occupational choice in previous studies (Desseranno, 2015 Falco et al, 2014 Dal Bo et al, 2013; Serra et al, 2011)

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Measured Attributes – Ability

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Sector choice

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Findings

Marginal effects (evaluated at the mean) - MEM (1) (2) (3) VARIABLES Public_Sector Private_Sector Development_Sector Cognitive ability

  • 0.0665*

0.0053 0.0612* (0.0341) (0.0194) (0.0357) Reservation wage

  • 0.00006

0.00009

  • 0.00003

(0.0001) (0.00005) (0.00012) Prosociality

  • 0.1132
  • 0.238**

0.351* (0.1829) (0.118) (0.191) Desired status

  • 0.0442**

0.0014 0.0427** (0.0182) (0.0117) (0.0189) Present bias 0.0637

  • 0.0056
  • 0.0581

(0.0604) (0.0386) (0.0633) Risk preference 0.0185

  • 0.0130
  • 0.0055

(0.0362) (0.0217) (0.0384) Socio-demo controls Yes Yes Yes

Obs = 380 Standard errors in parentheses. Standard errors are calculated based on sample weights. *** p<0.01, ** p<0.05, * p<0.1

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Marginal effects (evaluated at the mean) - MEM (3) (4) (5) VARIABLES Public_Sector Private_Sector Development_Sector Cognitive ability

  • 0.0789**

0.0031 0.0758** (0.0335) (0.0198) (0.0357) Reservation wage

  • 0.00006

0.00009

  • 0.00003

(0.00011) (0.00006) (0.00011) Prosociality

  • 0.2160
  • 0.235*

0.451** (0.1853) (0.1217) (0.198) Desired status

  • 0.0484**

0.0056 0 .0428** (0.0187) (0.0124) (0.0192) Present bias 0.0664

  • 0.0018
  • 0.0646

(0.0633) (0.0407) (0.0663) Risk preference 0.0051

  • 0.0149

0.0098 (0.0374) (0.0223) (0.0393) Pub sector perception 0.794***

  • 0.0945
  • 0.6996***

(0.1265) (0.0768) (0.1334) Priv Sect perception 0.0292 0.0383*

  • 0.0674**

(0.0275) (0.0198) (0.0293) Dev Sect perception

  • 0.0672**
  • 0.0445**

0.1117*** (0.0288) (0.0174) (0.0317) Socio-demo controls Yes Yes Yes

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Conclusions

  • 1. The development sector is the preferred sector choice for the majority of final

year university students

  • 2. Higher ability graduates are more likely to choose the development sector,

and less likely to choose the public sector in their early careers

  • 3. Heuristics and perceptions matter so information is key

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD

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Thank you

JAMELIA HARRIS - DPHIL CANDIDATE - UNIVERSITY OF OXFORD