Screening and Signaling Non-Cognitive Skills : Experimental Evidence from Uganda

We study how employers and job-seekers respond to credible information on skills that are difficult to observe, and how this affects matching in the labor market. To do so, we experimentally vary whether certificates on workers' non-cognitive skills are disclosed to both sides of the market during 1,200 real job interviews between young labor market entrants and small firms in Uganda. We observe the outcome of each job interview, and track our sample for two years. We find that the certificates cause workers to increase their labor market expectations, such as expected earnings, while managers of higher ability, who manage more productive firms and value non-cognitive skills more, revise their assessments of the workers' skills upwards. The two-sided reaction in terms of beliefs leads to an increase in positive assortative matching and to higher earnings for workers, conditional on employment. We conclude that information frictions create significant inefficiencies by distorting the allocation of workers to jobs