Youth Employment Programs - Independent Evaluation Group

This appendix presents the factors that determine youth employmentoutcomes, which contributed to the framework used in the evaluation. Youthemployment outcomes are determined by many factors and some of them maynot be specifically categorized as youth-focused. Thus, the MILES framework,shown in figure 2.1 of the main text, helps provide the context for thisevaluation.The Determinants of Youth Employment OutcomesThe youth employment situation in different countries is determinedby demand and supply factors, as well as by labor markets. The relativeimportance of these factors, and how they play out in a dynamic growthcontext, will vary across countries and regions. It is important forgovernments to know and understand these factors when they designyouth employment programs tailored to the youth groups most affected.Governments can then better incorporate in the design specific interventionsto address the underlying causes of youth employment problems.Labor Demand Side: Economic Growth and Net Job Creation by FirmsThe aggregate demand is a main determinant of youth employment anddepends on a favorable investment climate. The strength of the economyand its capacity to increase labor demand, and create work opportunities hasan impact on youth employment. During the recent global economic crisis,the demand for labor collapsed because product demand fell due to creditrationing, falling consumer confidence, and delayed monetary interactions(Bell and Blanchflower 2010). A business environment favorable to investmentand job creation in youth-intensive sectors is thus vital in absorbing younglabor market entrants.Structural changes in the economy affect the skills needed in the labormarket. The impact of growth on youth employment is affected by theopenness of the economy and technological change. Industrial changesand the resulting changing structure of labor demand (for example, formore-skilled or less-skilled workers) also affect young people’s labor marketprospects. Depending on the availability of skills, the demand for youthlabor may be skill-biased in a changing economy, and unskilled youth aremost at risk, benefiting less in business upswings, and suffering more indownswings. 1Sustained growth and skills investment are important in developing aformal sector and creating work opportunities for youth. The type of workopportunities—whether they provide regular wages and stable employmentor low and uncertain income—will largely depend on the stage of a givencountry’s economic development. In developing countries, a large fractionof the labor market is informal and a large proportion of the labor force haslow levels of education. Thus, many youth enter the labor market informallyand change jobs frequently. Even among those countries experiencing rapid56 Youth Employment Programs