Making Entrepreneurs: Returns to Training Youth in Hard Versus Soft Business Skills

We study the medium-term impacts of the Skills for Effective Entrepreneurship Development (SEED) program, an innovative in-residence 3-week mini-MBA program for high school students modeled after western business school curricula and adapted to the Ugandan context. The program featured two separate treatments: the hard-skills MBA features a mix of approximately 75% hard skills and 25% soft skills; the soft skills curriculum has the reverse mix. Using data on 4,400 youth from a nationally representative sample in a 3-arm field experiment in Uganda, the 3.5 year follow-up demonstrated that training was effective in improving both hard and soft skills, but only soft skills were directly linked to improvements in self-efficacy, persuasion, and negotiation. The skill upgrade was rewarded by substantially higher earnings; 38.7% and 21.2% increases in earnings for those who attended hard- and soft-training, respectively, largely generated through self-employment. Furthermore, youth in both groups were more likely to start enterprises and more successful in ensuring their businesses’ survival. The program led to significantly larger profits (27.8% and 34.8% for hard- and soft- treatment arms respectively) and larger business capital investments (72.5% and 58.8% for SEED hard and SEED soft, respectively). Both SEED curricula were very cost-effective; one (two) month’s worth of extra earnings as a direct consequence of having attended the SEED hard (soft) program would exceed its total cost. These benefits abstract from the job- and business-creation benefits of the program, which were substantial: relative to the control group, SEED entrepreneurs created 985 additional jobs and 550 new businesses.