151. Can Skill Diversification Improve Welfare in Rural Areas? Evidence from Bhutan
- Author
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Natalie Chun and Makiko Watanabe
- Subjects
Program evaluation ,Selection bias ,Economic growth ,rural sector ,training ,Public economics ,media_common.quotation_subject ,Geography, Planning and Development ,education ,Survey sampling ,Fixed effects model ,Development ,Diversification (marketing strategy) ,Rural poverty ,Net income ,Economics ,ComputingMilieux_COMPUTERSANDEDUCATION ,skill diversification ,Household income ,media_common - Abstract
This paper examines the impact of the three month training component of the Rural Skills Development Project (RSDP) in Bhutan. This project was designed to diversify income sources of rural households beyond agriculture and to reduce expenses spent on housing repairs by training villagers in carpentry, masonry, plumbing, and electrical wiring. The absence of a valid baseline survey and the non-randomized nature of beneficiaries to the project imposed significant challenges in assessing the program impacts. Time and cost considerations also resulted in an end line survey of Bhutanese households that had a control group that was drawn from the same villages as the trainees. To resolve these limitations, the authors used a match estimator that includes a proxy for motivation to create the match between the treatment and control group to estimate the causal impacts of the training. Potential pitfalls to estimates that can arise from unobserved selection bias and spillover effects were examined in detail and supplemented with qualitative analysis to support the validity of our results. There is evidence that the training program allowed for diversification of income sources into skills outside of agriculture by increasing the amount of income received from the skill areas covered by the training program. Income diversification mainly occurred for females, those who are less educated, and those who were trained in carpentry or masonry. As women are much less likely to participate in the training, encouraging greater equality in the skill development process may require providing more female-friendly training that has flexibility in training time and venues as well as training in other skill areas. The paper is organized as follows: section one gives introduction. Section two provides background on RSDP. Section three describes the related literature. Section four describes the research design including the choice of the control group and the data gathered for the evaluation process. Section five describes the empirical approach and results for a variety of specifications and sub-populations. Section six aims to validate the results by eliminating unobserved selection and spillover effects as possible factors. Section seven discusses the findings and provides qualitative evidence for our findings. Finally section eight concludes.
- Published
- 2012