Addressing Youth Employment: Evidence from Evaluation and Research at the World Bank Group

Youth Employment WorkshopAbuja, Nigeria

July 2013

Emmanuel Jimenez, Pia Schneider, Xue Li, Susan Caceres, YE team

Independent Evaluation Group

Two questions

► What has IEG learned from its review of what works to address youth employment issues?• Source: A Systematic Review of Evaluations of Youth

Employment Programs 2012• Messages:

– Diversity across countries of issues and of programs and policies– Mix and paucity of evidence on what works

► What has IEG learned from its evaluation of the WBG?• Source: Youth Employment Programs: An evaluation of World

Bank and International Finance Corporation Support 2012• Evaluation Questions:

– How has the World Group supported countries tackling youth employment problems?

– What is the evidence regarding the effectiveness of that support?

Diversity of the Issue: Expected Increase in Youth Population by Region

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50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2005 2010 2015 2020 2025 2030 2035

EAPECALACMENASARSSA

Source: World Bank Staff, based on data from HNPstats

Differences in youth employment across countries need different approaches

Nature of Problem ContextHigh formal sector unemployment for all young workers

Economic crisis, structural reforms and lack of job creation in all countries

Youth cohort growth is larger than job growth (e.g. Sub-Saharan Africa)

High unemployment for highly-educated youth

Voluntary unemployment among higher-income youth in MICs and LICs (e.g. Sri Lanka and MENA region)

Large number of casual, low-productivity, low-paid jobs held by youth

In MICs and LICs with a small formal sectorRural areas (farm and off-farm)Children in workforce and low school enrollment

High unemployment concentrated in subgroups of youth (minorities, poor)

Regional disparities in all countriesDiscrimination against subgroups

Youth Employment Interventions, by Categories

Fostering job creation/work opportunities

Smoothing school-to-work transition and job mobility

Fostering skill development and labor market relevance of skills

Regulations to encourage the hiring of young people

Training in entrepreneurship or business management and support to start businesses Wage subsidies

Direct job creation (public works programs)

Counseling, job search skills, information on vacancies, placement

Improving the quality of formal technical and vocational education and training (TVET) Non-formal remedial education/second chance training programs including training subsidies and vouchers Expanding/improving work-based learning Training combined with multiple interventions (training dominates)

Improving the business and investment climate**Not yet evaluated

Improving information on labor market , Program for overseas employment of young people*

Certification of skills, Providing information on training, Support for transportation and change of residence*

Findings from the Systematic Review

► Review of 36 studies conducted between 2000 and 2011

►Evaluation questions:• What types of youth employment programs

work best in which context? • What key features in implementation design

and targeting explain variations in employment and earnings in different economic contexts?

Findings: Mixed Results

► Formal TVET more promising than short-term courses

► Smoothing school to work transition and facilitating job mobility inconclusive

► Among job creations interventions, wage subsidies are most promising• Direct employment programs and labor

market regulations have mixed results• Entrepreneurship training has significant but

small effects

Examples of Recent Evaluations

► Tunisia Non academic entrepreneurship training track at the university level can lead to more self-employment

(Premand et al. “Entrepreneurship training and self employment among university graduates: evidence from a randomized trial in Tunisia”, December 2011)

► Uganda Unrestricted grants for training can enhance self-employment among groups in poor settings

(Blattman et al. 2011: Employment generation in rural Africa: midterm results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda).

Evidence paltry: Mixed and More is needed especially in LICs

OECD MIC LIC0

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40

Foster skill development (E)School to work transition and facilitate job mobility (L) Foster job creation (I)

Num

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Skill development is most often evaluated in international Impact Evaluation literature

Two questions

► What has IEG learned from its review of what works to address youth employment issues?• Diversity of issues• Diversity of programs and policies• Mix and paucity of evidence on what works

► What has IEG learned from its evaluation of the WBG?• How has the World Group supported countries

tackling youth employment problems? • What is the evidence regarding the effectiveness

of that support?

What is the Bank doing?

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13.5

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100

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700

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Yo

uth

Un

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plo

yme

nt R

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(%)

US$

Mil

lio

ns

Fiscal Year of Approval

IBRD Actual IDA Actual Youth Unemployment Rate

World Development Report on Youth

Global Crisis

Youth Unemployment Rate

Between FY01 and FY11, the Bank loaned $2.85 billion to youth employment through 90 operations in 57 countries, reflecting 0.9% of total lending

Where did lending and analytic support for youth employment go?

► 70% of lending to 10 countries, and 30% to 47 countries

► Education • 40% of 90 projects and of $2.35 billion lending for YE• Other sectors: social protection, finance and private sector development,

economic management, social development, gender,

► Projects have a supply-side approach:• Most often supported: Labor market information, quality of formal Technical-

Voc Education and Training TVET, information on training, skills recognition • Few interventions to support hiring, self-employment, business environment• Comprehensive approach missing including demand-side

► In the Africa region, analytic work tends to focus on formal employment in the urban areas. • Few Bank reports examine youth employment in rural low-income areas, and

employment opportunities in agriculture although the majority of low-income youth live in rural areas.

What is the evidence regarding the effectiveness of Bank support?

► Youth employment is not a strategic issue in most WB country strategies

► Evidence is scant on employment/earning effect in projects:• Tracer studies find positive employment and earning effects of

TVET• Workplace training increases effectiveness of formal TVET, but is

restricted by small formal sector • Little is known from Bank support to:

– Smoothing the transition from school to work and facilitating job mobility– Job creation / work opportunity interventions

► Few Bank operations identify impact on low-income youth► Need better diagnostics to inform policy

Some program features lead to better post-program results in employment and earnings

► Programs with multiple interventions that complement each other – such as class-room and on-the-job training with job search assistance

► Wage subsidies are promising if there is a strong private sector and youth have an opportunity to learn on the job, and attend regular training• Problem of low uptake among employers

► Programs need to be managed professionally and employment bureau needs to provide regular follow up. • Job search assistance is often not well implemented

Key lessons for Bank 1: A comprehensive approach is more effective than isolated interventions

► A comprehensive approach includes interventions that address:• Supply- and demand-side for youth, and • constraints in labor, credit and land market for

youth

► In rural low-income areas, programs are essential for stimulating:• market environment for growth of farms • household enterprises• rural agribusinesses • Access for rural youth to land, credit and skill

Lessons for Bank 2: Take a strategic and evidence-based approach

► Work across sectors and in rural areas:• Work with private sector • Work in rural low-income areas

► Better and more diagnostics are needed:• On youth employment interventions that target

youth in low-income and rural areas, especially in Africa

• Report results by beneficiary groups, socio-economic background, education levels, geographic areas and gender.

• Conduct cost and cost-benefit analysis of interventions and their fiscal impact.