Do Firms Know What They Are Looking For? A Demand-Side Experiment to Reduce Matching Frictions in Ugandan Labor Markets

Labor market mismatch remains a persistent challenge in Uganda. The unemployment rate for university-educated youth is particularly high, despite growing demand for skilled workers. A substantial body of work in economics has studied labor market mismatch from the supply side, focusing on reducing search costs or improving jobseeker signals. However, many firms hiring university graduates—firms that are essential to the growth of the high value-added service sector in Uganda—are young and inexperienced at hiring. Are these firms good at identifying needs and communicating them? Do they select the best candidates? The answers to these questions help us understand the importance of demand side frictions in perpetuating labor market mismatch.

This project investigates how firms’ selective attention to job requirements may contribute to mismatch through a randomized controlled trial in Kampala with 806 job openings. We test how a structured intervention that helps firms identify and articulate their true skill needs impacts overall match quality. The study’s three-arm design isolates causal effects by varying when firms receive support—before job posting (affecting the candidate pool and selection process) or after posting (affecting selection only). By identifying where in the hiring process attention constraints matter most to match quality (employer/ employee performance/ skill match and earnings), this research provides actionable insights for improving match quality in emerging sectors across low income countries.