An Evaluation of Ghana’s National Service Scheme

National cohesion and labor productivity are two central issues in sub-Saharan Africa. Ghana’s National Service Scheme (NSS) is an ambitious government program intended to address both, while also providing the labor required for completing national development priorities. The NSS requires all tertiary school graduates to complete a 12-month employment posting prior to entering the labor force. In a typical year, 75,000-100,000 tertiary graduates are placed into a 12-month posting via Ghana’s National Service Scheme. These postings pay below-market wages and are typically in the public sector. Policymakers at the NSS have a large degree of flexibility in assigning participants to a posting. The assignment mechanism could, for example, assign everyone to postings outside their home region or match participants from low-income regions to regions with high labor market potential or assign women to regions with high female labor force participation. Understanding the treatment effects of different NSS postings is necessary for policymakers to understand the tradeoffs associated with a given assignment mechanism. Furthermore, the assignment mechanism must be incentive compatible for participants. One of the key problems highlighted by NSS staff is the lack of compliance with initial postings. Once assigned to a posting, graduates may either fail to complete their assignment or request an alternative posting. Participants with higher outside options or those that face a less desirable posting assignment may be more likely to shirk on their assignment. Accounting for these incentive compatibility constraints may alter the optimal assignment mechanism under a given objective function. We are still in discussion with NSS to determine the exact assignment mechanism currently used and whether it can be considered random assignment—or stratified random assignment. With (stratified) random assignment of the postings, we would be able to use the initial assignment by the NSS as an instrument for an individual’s job characteristics during a given year and how these characteristics (e.g., private vs public sector, region’s labor market potential, ethnic minority-majority, female labor participation) shape outcomes of interest. To collect outcome data, we will be implementing a follow-up phone survey using a random sample of NSS participants taken from the NSS administrative data set. The phone survey will collect labor market information, such as current employment status and earnings, in addition to information on group prejudices and national cohesion. We will use the administrative data to estimate the effects of different assignments on compliance. Understanding the treatment effects of different postings is an important first step towards improving the assignment mechanism to align with the program’s mission, and we hope to continue collaborating with the NSS on future interventions to improve the program. For example, can SMS messages be used to improve compliance? What is the distribution of willingness-to-pay to be exempt from the NSS program and can allowing a fee-based exemption process improve labor market efficiency?