The Impact of Labor Intermediation and Training in High Informality Contexts. Evidence from Paraguay

This paper contributes to the literature by assessing a developing country with high levels of informality using administrative data and novel developments on difference-in-differences and synthetic control models. We also address potential problems highlighted by recent research, which has identified several weaknesses in the two-way fixed effects estimation (TWFE) strategy when (i) there are more than two time periods, (ii) there is variation in the timing of the treatment, and (iii) there is heterogeneity of the treatment effect.

In addition, programme ineffectiveness outside metropolitan areas is included, highlighting that supply-side interventions may be ineffective if there are no formal jobs available for beneficiaries. These results offer valuable insights for designing new employment promotion programmes that take into account this source of heterogeneity.