Improving the quality of informal apprenticeships in Ghana

Apprenticeships are widely perceived as a viable pathway for providing youth with marketable skills and improved employment prospects (Wolter and Ryan 2011). In high-income countries, formal sector apprenticeships are the norm, while in low- and middle-income countries (LMICs), they often occur within small-scale informal enterprises, with the firm owner doubling as the trainer (Teal 2016). In many African and South Asian countries, these informal sector apprenticeships are the most common source for skill training, far exceeding (formal) traditional vocational training options (ILO 2011). For instance, using harmonised data across six African countries, Filmer and Fox (2014) show that 20% of youth in these countries had participated in an apprenticeship compared to just 4% in formal vocational training. In Ghana, the context of our study, informal apprenticeships were responsible for training almost four times as many individuals as all other formal alternatives (Darvas and Palmer 2014).

Despite their significance, concerns persist regarding the quality of informal apprenticeships in LMICs. Previous research has identified the lack of monitoring, formal contracting, training standards (or curriculum), and formal certification as key factors that impede the quality of training delivered by informal apprenticeships (Filmer and Fox 2014, Darvas and Palmer 2014, Teal 2016, ILO 2019). Further, because apprentices tend to start similar business as their trainers when they complete their training (Frazer 2006), trainers could deliberately slow the pace of instruction, exert less effort, and provide lower quality training due to the fear of training potential competitors. The slower pace of instruction not only delays the entry of competitors, but also allows the trainer to reap additional benefits from the efforts of their low-wage earning apprentice.

Are monetary incentives for trainers a potential solution?

Our research (Brown, Hardy, Mbiti, McCasland and Salcher 2024) uses an experiment to examine whether monetary incentives for trainers can enhance the quality of apprenticeship training by strengthening the links between apprentices’ skill acquisition and their trainer’s renumeration. While there is a large body of research that shows how teacher incentives can improve student learning outcomes in K-12 school settings in LMICs (Breeding et al. 2021, Pham et al. 2021), there is limited evidence on the effectiveness of trainer incentives (Filmer and Fox 2014, Adoho et al. 2014). This type of evidence is needed because many government-sponsored training programmes in LMICs feature trainer payments or bonuses that are linked to specific trainee outcomes such as course completion, or job placement after training (Filmer and Fox 2014, Adoho et al. 2014).

In our field experiment, we enrolled around 800 apprentice hairdressers and tailors who were participating in an apprenticeship training programme sponsored by the Ghanaian government. We then randomly assigned roughly half of the trainers to receive bonus payments based on their apprentices’ scores on a practical test of skills that was administered by an independent team. Trainers in the control group received a fixed monetary payment of roughly 100 Ghananian Cedis (GhC) if their apprentice took the test. This design ensures that any differences between the two groups are not driven by income effects.

The impacts of bonuses in Ghana

Eight months after introducing the bonuses (in late 2015), a team of external assessors, who were experts in hairdressing and tailoring, administered a theoretical and practical skills assessment to apprentices in the study. These assessments adhered to the national occupational standards.  Although only about two-thirds of our sample of apprentices took the assessment, participation rates in the assessment were balanced across the treatment and control group. Overall, apprentices who trained with incentivised trainers scored 0.13 SDs higher than apprentices in the control group in the practical skills assessment in which apprentices were asked to demonstrate their skills by completing tasks such as sewing a garment and styling a model’s hair.

Almost two years later (in our endline survey), we measured apprentices’ skills using a (verbal) craft skills quiz that measured their understanding of key techniques and occupational proficiencies. Almost 90% of apprentices participated in this survey, and the participation rates were balanced across both experimental groups. Apprentices who trained with incentivised trainers scored 0.15SD on this assessment higher than their counterparts in the control group. Although the earlier assessments are not directly comparable to the craft skills quiz, the qualitative patterns suggests that the apprentices in the treatment group had acquired more skills than their counterparts and these gains were sustained over a two-year period.

We also use the endline survey to examine the labour market outcomes of participants in both the treatment and control groups. Consistent, with the skills gains, we find that individuals who trained with incentivised trainers earned about 25% more than their counterparts who trained with non-incentivised trainers. This increase was driven by earnings in self-employment rather than wage work. We find limited evidence of heterogeneity by individual or trainer baseline cognitive test-scores, or across different quantiles, suggesting that the gains were broad based and not limited to a particular group.

Our study suggests three reasons why the incentives worked. First, apprentices put in more hours, likely gaining more hands-on practice. Second, trainers in the treatment group were more likely to use formal syllabi such as the occupational standards. Third, apprentices in the treatment group were 20% more likely to complete their training and exit the firm than the control group, potentially allowing them to set up their own businesses earlier than their counterparts.

What does this mean for policy?

Modest, well-designed financial incentives to impart key skills could improve apprentice learning in a cost-effective manner. In our study, the incentives were about 3% of average annual profits . In addition, a simple cost-benefit calculation reveals that the extra earnings from individuals in the treatment group offset the costs of the programme in less than two years. However, because the study was relatively small and time-bound, it is unclear if the programme led to lasting behavioral changes among trainers or if trainers would eventually find ways to game the system with greater experience of such an incentive scheme. More research will be needed to assess the scale-up potential and document how trainers respond to repeated exposure to an incentive scheme.  

References

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Brown, G, M Hardy, I Mbiti, J McCasland, and I Salcher (2024), "Can Financial Incentives to Firms Improve Apprenticeship Training? Experimental Evidence from Ghana", American Economic Review: Insights, 6(1): 120-136.

Darvas, P and R Palmer (2014), "Demand and Supply of Skills in Ghana: How Can Training Programs Improve Employment and Productivity?".

Filmer, D and L Fox (2014), "Youth Employment in Sub-Saharan Africa".

Frazer, G (2006), "Learning the Master’s Trade: Apprenticeship and Human Capital in Ghana", Journal of Development Economics, 81: 259–298.

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Wolter, S C and P Ryan (2011), "Apprenticeship", in Handbook of the Economics of Education, Vol. 3, pp. 521–576, Elsevier.