More Sweatshops for Africa? Pilot Results from an Experimental Study of Industrial Labor in Ethiopia

Research Motivation Policy makers see industrial development as key to aggregate growth, but debate its value as a poverty alleviation strategy. For some, industrial jobs are exploitative and harmful, overworking the poorest, exposing them to health risks or unpleasant working conditions. For them, the key is to regulate these jobs, as well as to encourage people to remain smallholders or support them into self-employment. For others, industrial jobs are a source of steady wages and higher incomes than low-productivity agriculture and self-employment. For them, the question is not whether industrial labor improves wellbeing but by how much. They look at the long lines of applicants for every handful of factory jobs and see revealed preference for steadier formal labor, especially compared to the unpredictability, stress and drudgery of self-employment and agriculture. They object to an overly romantic view of selfemployment and agriculture that overlooks the fact that most people are unhappy entrepreneurs who actually value steady work and wages.