Generating employment in poor and fragile states: evidence from labor market and entrepreneurship programs

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This paper reviews the evidence on what interventions designed to raise incomes in fragile states work, and whether stimulating employment promotes social stability. Skills training and microfinance have shown little impact on poverty or stability, especially relative to programme cost. In contrast, the evidence suggests that injections of capital (cash, capital goods, or livestock) may stimulate self-employment and raise long term earning potential, often when partnered with low-cost complementary interventions. Such capital-centric programmes, alongside cash-for-work, may be the most effective tools for putting people to work and boosting incomes in poor and fragile states. Such programs could help to reduce crime and other materially-motivated violence modestly. However, a degree of caution should be taken regarding the effects of employment on crime and violence, as some forms of violence do not respond to incomes or employment.

 

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