Youth Employment Programs - Independent Evaluation Group

• Chapter Highlights• High youth unemployment, regardless of education level, is an important issue formiddle-income countries.• In low-income countries, youth from poor families often work for family businessesor farms, or in low-earning jobs in the informal sector. They often work under poorconditions as unpaid laborers, and are more likely to be among the working poor thanadults.• Youth employment issues are major concerns because they affect the welfare of youngpeople and potentially the long-term performance and stability of the rest of theeconomy.A growing economy and a stable macroeconomic and political environmentare fundamental conditions for job creation and employment for all agegroups. This is the primary requirement for increasing employment overall,and youth employment as a consequence. Yet even where growth is positive,youth differ from adults in the labor, asset, and credit markets. Onedifference is that employers have imperfect information about the skills andproductivity of young applicants, and youth are uncertain about the type ofemployer and job they want (Begg and Blanchflower 2000). As a result, youthhave a higher job turnover rate than adults and take longer to find work.Another difference is that youth are more likely to be among the workingpoor than adults. In addition, they are at higher risk of unemployment,underemployment, or working in jobs with low earnings. The early worksituation of young people has welfare consequences for their future.Addressing youth employment issues is a major concern for governmentseverywhere, and is all the more challenging where stable economicpolicies are not in place and institutions are weak. This report is the firstIndependent Evaluation Group (IEG) evaluation of the World Bank Group’ssupport to clients seeking to address youth employment problems.The Nature of the Youth Employment ProblemYouth unemployment rates are everywhere considerably higher than adultrates, but the nature of the problem varies widely by country context. In 2011,the International Labour Organization (ILO) estimated that 12.6 percent ofyouth in the global labor force are unemployed, corresponding to about 74.6million youth. The global youth to adult unemployment ratio is 2.8. But theseratios vary substantially across time and across countries. In Southeast Asia,for example, the ratio has increased most over the past decade (table 1.1).Lack of growth and job creation contribute to higher youth unemployment inall countries. As the economy shrinks with the business cycle, youth—oftenthe least educated—are the first to be let go, most without a social safetysystem to protect them against the financial risk related to unemployment.2 Youth Employment Programs