differences find mixed results ‐ either no statistically significant differences in outcomes by gender, or stronger effects for male participants (McKenzie, 2017). Thus, while gender certainly has an impact on skill development, occupational choice and access to capital, the assumption that young women _need_ vocational training to access employment may not hold. There may be cheaper and more effective approaches.

# 3.2.3 **Evaluation results: Demand‐side interventions for wage employment**

All developing countries need strategies to increase investment in labor‐intensive enterprises in order to grow wage employment. Over the medium term, growth in wage employment will require an accelerated transformation process to take hold, in which more and more private firms become established and create more and more jobs. An increasingly common type of development program, which may have employment effects in the near term, is to build the profitability of businesses. In the last few years, the number of completed impact evaluations on these programs has grown dramatically, but figuring out what works remains difficult, for the following reasons.

- Most countries now participate in multiple assessments of their “business climate” (by the World Bank, World Economic Forum, and others). These assessments usually find deficiencies, but they do not always agree on which ones are important. Another problem with these assessments (from the perspective of this review) is that they rarely focus on which constraints have the greatest effect on investment in labor‐intensive enterprises. Finally, many constraints are not easily subjected to an impact evaluation (infrastructure construction is one example).

- In most cases, even when interventions have been subject to an impact evaluation, employment growth is often not among the outcomes evaluated.<sup>10</sup>

- It is particularly difficult to sort out what would work for youth, because employment creation outcomes are not segregated by entry level jobs vs. higher skill jobs.

Nonetheless, some evidence is available on successful interventions to increase demand for labor in modern non‐agricultural firms.<sup>11</sup> In a systematic review for 3ie, Piza et al., (2016) argue that impact evaluation evidence shows that business support services for small and medium enterprises (SMEs)— training, management support, credit lines, innovation policies, and interventions that encourage firms to coordinate to realize agglomeration externalities—do increase employment, where that outcome has been measured. They also found that the number of impact evaluations is small and the interventions too heterogeneous to tease out which ones are more effective.

The discussion of results that follows (summarized in Table 2) does not attempt to determine which interventions to try, but simply catalogues where they have been found to be effective.<sup>12</sup> The key results are:

- Reducing constraints to firm expansion does encourage firms to hire more workers.

- Interventions targeted to larger firms seem more likely to have an employment effect.

**Increasing access to finance for small and large firms to expand.** The lack of affordable credit to expand operations is the constraint most commonly cited by business operators. High interest rates

> 10 See the Grimm and Paffhausen (2015) systematic review for a discussion of this point. Although the McKenzie and Woodruff (2013) review of business training interventions is a key systematic review, it did not cover employment outcomes at all.

> 11 In this section, a large share of the evidence comes from middle income countries. The applications to lower income countries are highlighted.

> 12 Similar to the supply‐side interventions, a number of the demand‐side programs included in the Piza et al., (2016) study used multiple interventions, making it difficult to determine which one actually made a difference.

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