Creating New Positions? Direct and Indirect Effects of a Subsidized Apprenticeship Program
Evaluations of employment programs usually focus on direct impacts on participants, but potential indirect effects are rarely quantified. This paper analyzes how the introduction of a subsidized apprenticeship program in Côte d’Ivoire impacts youths’ decision to enter apprenticeship and firms’ demand for apprentices in the short-term. The experiment simultaneously randomized whether apprenticeship positions opened by firms were filled by the program, and whether interested youths were assigned to a formal apprenticeship. This design allows for estimating whether individuals forgo other apprenticeship opportunities (windfall effects), and whether firms replace other apprentices with program participants (substitution effects). We find both effects to be moderate. A framework shows how they combine. Overall, 0.74 to 0.77 apprenticeship position is created per subsidized apprentice. This shows that the intervention expands access to apprenticeships and increases the net number of positions in firms. The subsidy offsets foregone labor earnings while youth are in formal apprenticeships. At the same time, the net value of work provided by apprentices increases, pointing to large indirect effects in firms.