Four Ways to Maximize the Effectiveness of Youth Employment Programs

World Bank

The youth employment challenge is a stubborn reality in all regions and nearly every country. Over 35 per cent of the estimated 201 million unemployed people today are youth (between the ages of 15 and 24).  Worldwide, the challenge is not only to create jobs but to ensure quality jobs for young people who are often underemployed, work in the informal economy, or engage in vulnerable employment. Today, two out of every five young people in the labor force are either working but poor or unemployed.

Measuring the impacts of youth employment programs is therefore key to designing effective policies. After an exhaustive revision of over 100 credible impact evaluations, the first global systematic review and meta-analysis of youth employment interventions shows the positive impact they have on labor market outcomes, with particular emphasis on skills development, entrepreneurship promotion, subsidized employment programs, and employment services for youth. Taking advantage of the very rich data collected, this blog complements previous discussions and stresses further aspects on the effectiveness of youth employment interventions.

Youth employment programs often work

One out of three youth employment programs had positive and statistically significant impacts on labor market outcomes. This result is far from disappointing. On the contrary, it demonstrates that investing in youth pays off and affects participants' outcomes in a positive way, particularly through increased chances of getting a job or higher earnings. But, what happened to the other two thirds of programs? Numerous impact estimates are not statistically significantly different from zero, and there are two main explanations for this:

  1. various studies do not have enough statistical power to detect smaller effect sizes, and
  2. many impacts are likely small – which in turn reflects that many youth interventions are in fact small.

Context matters

Youth employment programs are largely positive in low- and middle-income countries compared to higher income countries. Figure 1 illustrates that, on average, all employment outcomes for all intervention types in low- and middle-income countries have effect sizes that are larger than – and significantly different from – zero.

Why such a difference?  Being unemployed or unskilled in a high-income country – where labor demand is skill intensive – puts youth at a distinct disadvantage in comparison to well-educated cohorts. While employment programs help these youth to (re)connect to the labor market, they may not fully compensate for any failure to acquire knowledge or skills earlier in the education system. In contrast, in lower income countries, with large cohorts of disadvantaged youth, marginal investments in skills and employment opportunities lead to larger changes in labor market outcomes.

Effects increase with time

The mounting global evidence on employment programs has identified a very important pattern: the more impacts are measured in the longer run, the more likely they are positive (see our review and paper, as well as  Card et al. 2015). This is fresh evidence, because only recently an increasing number of studies estimated long-run effects (two years and later after program participation); and many studies, by looking only at short-run impacts, miss important information on program effectiveness. Sometimes sustained impacts may materialize only years after the program (see blog on the long-term impacts of a youth employment program in the Dominican Republic).

There's even more to this timing pattern. First, skills training programs depict a particularly pronounced pattern, which, in a way, makes intuitive sense, because investments in human capital take time, but precisely these investments effectuate long-run positive impacts on labor market outcomes. Second, the timing pattern is especially pronounced among youth. Card et al. compare the effects of employment programs targeting adults vs. young people, and find that long-run effects matter the most for youth employment programs, and are more likely to increase in significance over time (Figure 2).

Intensity and scale are key

We look into the important role of the “how” interventions are designed and delivered. Some elements stand out, such as adequate profiling, efficient monitoring, results-based management and appropriate incentives, which allow implementers to better respond to youth’s needs, enhance program participation, and ensure quality in service delivery.

The intensity and scale of the interventions matter too. We show that, on average, skills training programs improve employment and earnings among youth, particularly in the long-run. The ample evidence from developed countries that human capital investments decisively shape labor market outcomes over the entire life course also applies to developing contexts. Equipping youth with relevant skills that are consistent with the needs of the labor demand constitutes a key investment for a better future. Sure, often impacts are small, but this does not mean that youth training programs don’t work – it simply reflects the point that many of the programs implemented worldwide are of short duration and reach a very limited number of youth. Given what we know about the economic returns to a year of full-time education in a developed economy, what can we expect from programs that (only) provide some 100 or 200 hours of basic skills training? Program intensity and scale are therefore key to achieve positive and long-lasting impacts, particularly among disadvantaged youth.

Originally published by World Bank