from EVIDENCE to POLICY Learning what works for better programs and policies September 2016 Can Entrepreneurship Education Improve Work Opportunities for College Graduates? Education is usually seen as a route for improving peo- ties for their citizens. Governments are still grappling ple’s employment opportunities, but this hasn’t proven with questions related to what programs work best and SKILLS AND EDUCATION the case in many developing countries. As the World in what context. Bank’s 2013 World Development Report highlighted, The World Bank is committed to helping countries the mismatch between the meet the employment needs of their people, part of skills and aspirations of the United Nations Sustainable Development Goals. college graduates and the In Tunisia, the World Bank worked with the gov- realities of labor markets ernment to evaluate a program designed to provide not only limits a country’s university students entrepreneurship education and economic development, assistance in developing a business plan. The evalua- but can also affect social tion found that the program—currently in its seventh cohesion. In the Middle year—increased self-employment and helped students East and North Africa, ac- develop some skills associated with successful entrepre- cess to higher education neurship in the short term. Nevertheless, there were has been booming and so no sustained impacts four years after graduation. The have unemployment rates results highlighted that limited access to capital was a among young adults. Joblessness and underemployment key challenge for many aspiring entrepreneurs. As gov- are viewed as some of the triggers of the Arab Spring, ernments in the region are faced with high unemploy- which started with Tunisia’s so-called Jasmine Revolu- ment among skilled and educated youth, the lessons tion in early 2011. Even before the Arab Spring, many learned from the evaluation will help policymakers countries in the region—and elsewhere—recognized and development experts hone programs that deliver the importance of improving employment opportuni- more sustainable impacts. Context The Government of Tunisia has long recognized the among graduates, the government made changes in gap between the expectations of the growing number the undergraduate curriculum to introduce a special of college graduates and existing jobs in the economy. entrepreneurship track. Students in their last semes- National unemployment is estimated to be about 15 ter could receive entrepreneurship education and sup- percent, but similar to many countries in the Middle port developing a business plan. The program, which East and North Africa region, educated youth have is ongoing, began in the 2009-2010 academic year and higher unemployment rates than their less educated eligible students in the country’s 12 public universi- counterparts and they’re also less likely to start their ties took part during the second semester, beginning own businesses. To expand employment opportunities in February 2010. Evaluation All 18,682 students in their third year, which is the last entrepreneurship program between February 2010 and year of university (licence appliquée) were eligible to June 2010, when they graduated. About 67 percent apply for the program in its first year of implementa- of students finished the program’s first module, which tion. Just over 9 percent, or 1,702 students, filled out included business training delivered by the public em- an application form. Some students applied in pairs, ployment offices, and 59 percent completed both the so the total number of registered projects was 1,506. business training and the coaching sessions. Follow-up Two-thirds of the applicants were women, which re- interviews were conducted in-person between April and flected their enrollment level in the universities. Be- June 2011, a few months after the Tunisian revolution. cause the program only had room for about half the Interviews included questions on employment, busi- number of applicants, the evaluation team was able ness skills, behavioral skills, personal aspirations, and SKILLS AND EDUCATION to randomly assign half the students to the program attitudes. Researchers contacted the study participants and half to continue with the standard university cur- for a second round of follow-up between March and riculum. Randomization was conducted at the project June 2014, around four years after graduation. Eighty level and stratified by gender and study subject. The five percent of individuals in the original sample were treatment group included 856 students, and the con- re-contacted—and the tracking rate was similar in both trol group 846 students. The students took part in the the treatment and control group. Findings The impacts of the program were short- Both female and male participants were more lived: While students assigned to the likely to have had a project idea and to have entrepreneurship track were slightly more realized it at some point in the past— but their likely to be self-employed one year after success rate was the same as people who didn’t graduation, there was no impact on self- go through the program. employment four years after graduation. The entrepreneurship track led to more business ideas In the first follow up, which took place about a year af- and more attempts to realize those ideas. In 2014, 67 ter graduation, students who were assigned to the train- percent of participants reported having a project idea ing program were about three percentage points more in the past, as compared to 58 percent in the control likely to be self-employed as compared with those who group. Overall, 28 percent of participants tried to real- were not assigned to the training. Three years later, this ize those ideas at some point in the past, as compared difference had disappeared, with no lasting impact on to 19 percent in the control group. Although they self-employment. In the short-term, there were gender were more entrepreneurial, their business ideas didn’t differences with regard to program impact, with men succeed at a higher rate than their peers who didn’t more likely to be self-employed a year after graduation. go through the program. While the program led to an Over time, however, these gender differences disap- increase in project ideas, attempts to set up projects peared, with male participants no more likely than fe- were not sustained. male participants to be self-employed. At endline, male participants were no more likely than female partici- pants to be self-employed. The program itself was comprehensive and After a year, program participants were more likely to sought to give students what they needed to know an entrepreneur or a banker, but after four years, develop successful business plans. But it wasn’t that larger network seemed to have faded as well, with able to sustain the business plans they had no real differences between the two groups. Those on developed. the entrepreneurship track also understood slightly better how to apply for credit. Nevertheless, program partici- The program had two parts. The first consisted of a 20- pants are similarly skeptical, as compared to the control day entrepreneurship course organized by the public group, in their ability to obtain credit. employment office, which aimed to give students the business, behavioral and networking skills for success- fully starting a business. Students were given training in developing business ideas, writing a business plan and managing a project. Subsequently, they presented their business plans to bankers and experts to get feed- back. Students were given training and time to research implementation, estimate financial costs and build net- works. In the next phase, students were assigned a per- sonal private-sector coach and were supervised by a uni- versity professor to finalize their business plan. Students were expected to participate in eight coaching sessions. After graduating, the students could enter their plan in a competition for seed funding, which a small number of students were awarded. Four years later, however, gradu- ates of the entrepreneurship track were no more likely than other former students to have an active project. The program boosted students’ entrepreneurial ••• 62 percent of those surveyed said that knowledge in the short term, with some smaller lasting gains in the long term. the biggest obstacle to realizing their One immediate goal of the program was to give students the technical and business know-how they business dream was their inability to needed to be entrepreneurs and to develop the neces- finance their project. sary behavioral skills. After a year, 77 percent of par- ticipants reported knowing how to write a business ••• plan, compared with 45 percent in the control group. That figure decreased to 60 percent in the treatment Program participants faced challenges in obtain- group after four years, however. And while some of ing credit and access to startup funds, which this knowledge remained, there were no lasting ef- likely contributed to their inability to set up or fects on the participants’ entrepreneurial spirit: Most maintain their projects. students who had a business idea abandoned it and participants did not have more new business ideas as Program participants were more likely to prepare a business compared with those in the control group. The pro- plan in advance of setting up their projects, and as previ- gram had mixed effects on entrepreneurial and per- ously mentioned, sustained some of their entrepreneurial sonality dimensions in the short term, with no lasting knowledge four years after graduation. However, the over- effects in the long term. all study results provide strong indications that skills may not be the main challenge facing these educated aspiring Participants’ business-related networks were entrepreneurs. Indeed, during the follow-up survey, many no bigger after four years, although they were participants reported difficulties in access to finance and slightly better informed about how to apply for 62 percent of those surveyed said that the biggest obstacle credit at a bank. in realizing their business dream was an inability to self- finance their project. Other challenges they reported in- In the short-term, students in the entrepreneurship cluded limited access to external financing, and burden- track were more optimistic about their overall pros- some bureaucratic procedures. Women reported facing pects in the labor market and more likely to feel that additional obstacles, such as social pressures and difficulties they were moving forward in life, compared to those in balancing professional and personal lives. in the control group. But after four years, the differ- ences between the control and treatment groups had Though program participants reported being largely faded. more hopeful about their future a year after the program ended, that increased optimism faded in the long term as well. Conclusion SKILLS AND EDUCATION Long-term follow up of the program has provided criti- sustained in the long term, may also be critical to ensur- cal insights into the challenges of providing effective en- ing success. Indeed, access to capital—not only skills— trepreneurship education. As the results highlight, lim- is oftentimes the main limitation that young entrepre- ited access to capital remains a key challenge for many neurs report facing when trying to start small businesses aspiring entrepreneurs. Policy makers can address this and create a better future for themselves and their fami- challenge directly by streamlining the bank loan pro- lies. As policy makers continue to seek innovative ways cess, providing cash grants to young graduates or seek- to meet the growing demand for jobs, the evaluation ing new approaches that remove barriers young people results have highlighted the need to continue searching face in obtaining credit. Additional follow-up support for cost-effective programs that more broadly meet the after graduation, such as coaching and access to business needs of young, motivated and aspiring entrepreneurs. development services to ensure that short-term gains are (*) The Strategic Impact Evaluation Fund, part of the World Bank Group, supports and disseminates research evaluating the impact of development projects to help alleviate poverty. The goal is to collect and build empirical evidence that can help governments and development organizations design and implement the most appropriate and effective policies for better educational, health and job opportunities for people in developing countries. For more information about who we are and what we do, go to: http://www.worldbank.org/sief. The Evidence to Policy note series is produced by SIEF with generous support from the British government’s Department for International Development. A short-term evaluation of the entrepreneurship track was released in a joint report by the World Bank and Tunisia’s National Observatory for Employment and Skills (Observatoire Nationale d’Emploi et des Qualifications, ONEQ). The study was later published by Premand, P., Brodmann, S., Almeida, R., Grun, R., & Barouni, M. (2016): Entrepreneurship Training and Entry into Self-Employment among University Graduates, World Development 77, 311-327. doi: http://dx.doi.org/10.1016/j.worlddev.2015.08.028. The World Bank team who led the long-term impact evaluation included Jumana Alaref, Stefanie Brodmann, and Patrick Premand. The ONEQ team comprised Nihel Khchine, Ezzedine Mosbah, Kefi Rahmani, and Walid Troudi under the overall guidance of Fakher Zaibi. Quantitative data was collected by ISTIS. Marwen Hkiri and Zied Ouelhazi were responsible for supervision of data collection. The evaluation was financially supported by the Women’s Leadership in Small and Medium Enterprises (WLSME) Trust Fund, funded by the U.S. Agency for International Development and the Strategic Impact Evaluation Fund (SIEF*). THE WORLD BANK, STRATEGIC IMPACT EVALUATION FUND 1818 H STREET, NW WASHINGTON, DC 20433 Writer: Daphna Berman • Series editor: Aliza Marcus