Youth Employment Programs - Independent Evaluation Group
Youth Employment Programs - Independent Evaluation Group Youth Employment Programs - Independent Evaluation Group
ConsequencesEarly unemployment is stressful and can leave scars. Unemployed youth donot get a chance to build professional skills. As a result, they are more at riskfor higher adult unemployment, career downgrades and lower wages laterin life, and a loss in lifetime earnings (Kahn 2010). In the United Kingdom,Gregg and Tominey (2005) found a large and significant wage penalty of13 to 21 percent up to 26 years later as a result of early unemployment.Such long-term evidence for developing countries is scarce. However, otherevidence points to similar problems: Low-skilled youth who are not ineducation, employment, or training (NEET)—around 70 percent of youth inEgypt and Pakistan (World Bank 2012)—are more likely to remain in thissituation. Surveys from 60 developing countries show that young peopletake an average of 1.4 years to find stable employment after school (WorldBank 2007). Many youth are discouraged and some migrate to find work.Joblessness has negative externalities on social cohesion, which may affectconflicts and poverty.The agriculture sector remains a significant employer of young workers inAsia and Africa, yet many youth are migrating to find higher earnings.Young people are the key to the future of agriculture. However, given the lowearnings and growing disinterest of youth in agriculture, the lack of capacityof other rural sectors to absorb youth, particularly in Asia and Africa,contributes to migration, joblessness, disillusionment, and the associatedrisks of instability (Lochner and Moretti 2004).The youth dividend, that is the added productivity to economic growth whenyouth cohorts enter the workforce, cannot materialize without creatinghigher productivity jobs for youth. Increasing youth cohorts add to thechallenges for youth in search of decent livelihoods and employment, andfor governments in providing education and accelerating job growth toaccommodate these youth (appendix A, box A.3).Youth unemployment is costly. Related costs include direct costs to thegovernment, depending on the extent of support programs, such asunemployment insurance, public works programs, and costs related tothe economic loss of investment in education, forgone earnings, savings,and aggregated demand (ILO 2010). Instead of contributing to society,unemployed youth create a direct cost estimated at $40–50 billion annuallyfor the Middle East and North Africa (IFC 2011a), reflecting about 3 percent ofthe region’s gross domestic product (GDP) in 2010 (GDP in constant US$ for allMENA countries, World Development Indicators). Youth unemployment is nowan important component in the misery index (Dao and Loungani 2010), thesum of inflation and unemployment, as governments have tamed inflation(figure 1.1).6 Youth Employment Programs
Figure 1.1 Youth Unemployment in the Misery Index, by Region, 201040Youth unemployment rate (%) Adult unemployment rate (%) Inflation rate (%)3530Percent25201510512.719.48.813.69.914.425.5 23.80WorldCentral andSoutheasternEurope (non-EU)and CISEastAsiaSoutheastAsiaand thePacficSouthAsiaLatinAmericaand theCaribbeanMiddleEastNorthAfricaSources: ILO 2011b; IMF 2001.Note: The median inflation rate for each region is based on the median of Bank countries in the region.Africa is excluded, as unemployment is not an appropriate indicator.Objective of this EvaluationThis is the first IEG evaluation of the World Bank Group’s involvement inyouth employment or labor markets. The objective of this evaluation is toaddress three questions, which are the topics of the next three chapters:• What is the nature of the Bank Group’s support to countries tacklingyouth employment problems and how should they be evaluated?• What is the evidence that the Bank Group supports priority countryneeds in youth employment issues?• What is the evidence regarding the effectiveness of that support?The evaluation seeks to understand the factors that affect the success ofdifferent interventions and offers lessons for informing future Bank Grouplending.Note1. The total fertility rate declined from 6.9 to 2.3 children from 1971-2009, andgirls’ school enrollment increased from 1.1 million to 4 million between 1991 and2005. Labor force participation doubled.Why Focus on Youth Employment? 7
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Figure 1.1 <strong>Youth</strong> Unemployment in the Misery Index, by Region, 201040<strong>Youth</strong> unemployment rate (%) Adult unemployment rate (%) Inflation rate (%)3530Percent25201510512.719.48.813.69.914.425.5 23.80WorldCentral andSoutheasternEurope (non-EU)and CISEastAsiaSoutheastAsiaand thePacficSouthAsiaLatinAmericaand theCaribbeanMiddleEastNorthAfricaSources: ILO 2011b; IMF 2001.Note: The median inflation rate for each region is based on the median of Bank countries in the region.Africa is excluded, as unemployment is not an appropriate indicator.Objective of this <strong>Evaluation</strong>This is the first IEG evaluation of the World Bank <strong>Group</strong>’s involvement inyouth employment or labor markets. The objective of this evaluation is toaddress three questions, which are the topics of the next three chapters:• What is the nature of the Bank <strong>Group</strong>’s support to countries tacklingyouth employment problems and how should they be evaluated?• What is the evidence that the Bank <strong>Group</strong> supports priority countryneeds in youth employment issues?• What is the evidence regarding the effectiveness of that support?The evaluation seeks to understand the factors that affect the success ofdifferent interventions and offers lessons for informing future Bank <strong>Group</strong>lending.Note1. The total fertility rate declined from 6.9 to 2.3 children from 1971-2009, andgirls’ school enrollment increased from 1.1 million to 4 million between 1991 and2005. Labor force participation doubled.Why Focus on <strong>Youth</strong> <strong>Employment</strong>? 7
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