Learning and Earning: Evidence from a Randomized Evaluation in India

Abstract: This paper examines the economic returns from participating in a subsidized vocational education program in stitching and tailoring offered to women residing in certain disadvantaged areas of New Delhi, India. The availability of pre and post-training data in an experimental framework allows us to measure the effects of participating in this program on employment, hours worked, job search, earnings, female empowerment, entrepreneurship and measures of life satisfaction. The program, in less than a year, has generated substantial improvement in labor market outcomes for these women. In particular, we find that women who were randomly offered the training program are almost five percentage points more likely to be employed, six percentage points more likely to look for a job and on an average work two additional hours in the post-training period compared to those who were not offered the training. We find that during the post-training period, women in the treatment group earn twice as much as women in the control group. There is also a large increase in ownership of sewing machine in the post-training period. The program impacts are much larger for women who completed the training program. We also find that the program effects vary with participants' intrinsic preferences for risk, competition, and confidence. Finally, a simple cost-benefit analysis suggests that the program is highly cost effective and there are considerable gains from both continuing the program in the current location and replicating it in different locations.