Getting Unemployed Youth into Jobs: Lessons for New Zealand from - PowerPoint PPT Presentation

Getting Unemployed Youth into Jobs: Lessons for New Zealand from Jobs: Lessons for New Zealand from experiments in middle income p countries David McKenzie World Bank David McKenzie, World Bank

The problem The problem

The Problem: Unemployment Rates Around the World in 2011 30 30 25 20 15 10 10 Youth Youth Adult 5 0 Source ILO Global Employment Trends 2012

Why might youth have such trouble finding employment? • Lack of work experience and untested – so k f k i d d employers find it difficult to assess quality. • Lack of soft skills – employers complain graduates lack key soft skills like how to work g y well in teams, dress and behave in professional manner, etc. p , • Skills mismatch – may have dropped out of school or trained in areas with low labor school, or trained in areas with low labor demand

Policy response Policy response • Whole range of different active labor market policies designed to try and help youth find jobs – Training programs – Employment centres p y – Internship/Job experience programs – Hiring subsidies, etc. – Hiring subsidies etc (and of course real solution may lie in policies to stimulate labor demand – private sector i l l b d d i development policies).

But do any of these work? But do any of these work? • Consider a training program run by a Government for unemployed youth. p y y • The program notes that 50% of all people trained were employed a year later trained were employed a year later. • Is this good or bad?

The problem of knowing whether our programs worked? • The revealed preference approach: youth are choosing to Th l d f h th h i t take these programs, they tell us afterwards they thought they were good – so they must be – But might just reflect low opportunity cost of time/desperation. • The before ‐ after approach: none of them were employed before 50% are afterwards so program is big success before, 50% are afterwards, so program is big success. – But maybe they would have found jobs anyway • The difference ‐ in ‐ differences approach: compare them to unemployed youth who didn’t go through the program: – Suppose we find only 30% of those who didn’t go through program are employed afterwards, vs 50% for those trained p g p y , % – This might just reflect that more motivated people are more likely to take the course, and also to find jobs afterwards.

Randomized experiments Randomized experiments • Basic idea: take 1000 unemployed i id k l d – Use a random number generator to randomly choose 500 of them to be the Treatment group (offered training) – The other 500 are the control group (not offered training) – Two groups should be comparable, with only difference due to chance • So comparing outcomes should enable us to see what h l bl h would have happened.

Illustration 1: Jordan Illustration 1: Jordan • At the time of graduation, 93% of female community college graduates in Jordan say y g g y they want to work • But 16 months later only 23% are employed • But 16 months later, only 23% are employed  Request to try out different policies to help them find jobs.  Jordan NOW (New Opportunities for Women)  Jordan NOW (New Opportunities for Women) pilot program.

Obtaining the Experimental Sample Obtaining the Experimental Sample • 8 main public community colleges 8 i bli i ll • Baseline surveys taken in July 2010 of all second ‐ year students in these colleges giving data on 1755 female students before in these colleges, giving data on 1755 female students, before students had taken their final examinations. • In August 2010 this was then merged with administrative data on examination results gave 1395 who had passed • Randomly selected 1350 of these to be experimental sample

Who are these graduates? Who are these graduates? • Typical age 20 ‐ 22 • 13% married at baseline; only 16% ever 13% married at baseline; only 16% ever worked

The Interventions The Interventions • Wage Subsidy W S b id ‐ Graduate given a job voucher they could take to firm when looking for work looking for work ‐ Voucher would pay the firm 150 JD ($225) per month for up to 6 months if they hired worker (= minimum wage) ‐ Firm had to be legally registered, have a bank account, and Fi h d t b l ll i t d h b k t d give job offer in writing ‐ Monthly monitoring to ensure worker still employed. y g p y ‐ If worker leaves firm before 6 months up, they take the voucher with them – can apply remaining months at another firm another firm. ‐ Valid for max of 6 months in 9 month window (Oct 2010 ‐ Aug 2011).

Why might wage subsidies work? Why might wage subsidies work? • short ‐ term subsidies may have long ‐ term effects by h b idi h l ff b raising the productivity of youth through work (Bell et al 1999 et al., 1999 • may encourage employers to take a chance on hiring inexperienced untested workers (World Bank 2006) inexperienced, untested workers (World Bank, 2006). • May provide youth with the crucial experience needed to find other jobs needed to find other jobs • Might give youth confidence to approach employers (Galasso et al 2004) (Galasso et al, 2004).

Employability skills training Employability skills training • • Training course of 45 hours (5 hours/day for 9 days) on key soft skills Training course of 45 hours (5 hours/day for 9 days) on key soft skills employers want graduates to have • Provided by BDC, local NGO with widespread local name recognition and good reputation for skills training and good reputation for skills training. • covered effective communication and business writing skills (e.g. making a presentation, writing business reports, different types of correspondence) team ‐ building and team work skills (e g correspondence), team ‐ building and team work skills (e.g. characteristics of a successful team, how to work in different roles within a team), time management, positive thinking and how to use this in business situations, excellence in providing customer service, , p g , and C.V. and interviewing skills. • Sessions were based on active participation and cooperative learning rather than lectures, with games, visual learning experiences, group g g p g p exercises, and active demonstrations used to teach and illustrate concepts

Why might this work? Why might this work? • Growing evidence that non ‐ cognitive or soft skills are important for employment and a range of other life outcomes (e.g. Bowles et al, 2001; Heckman et al., 2006). • May enhance employment prospects by giving youth better skills and confidence for looking for jobs and by making them more productive in their first months in the job by reducing the amount of time firms need to spend training them on the basics of working in a business environment.

Experimental Design Experimental Design • 1350 students randomly allocated into one of four groups: g p – 450 into a Control group – 300 offered just the wage subsidy 300 offered just the wage subsidy – 300 offered just the soft skills training – 300 offered both the wage subsidy and soft skills training.

Isn’t this unfair? Isn t this unfair? • Gut reaction of some people to randomization is G t ti f l t d i ti i that it is unfair that we are giving a program to some people and not others some people and not others. • But – Funding and training capacity limited – we did not – Funding and training capacity limited – we did not have funds to give to everyone – so this way everyone gets the same chance of being chosen. – Funding has an opportunity cost – before spending lots of public money on such a program, want to know whether or not it actually works – it is unfair to whether or not it actually works it is unfair to taxpayers to spend lots of their money on something that doesn’t work.

Randomization ensures similar looking groups Table 2. Comparison of Means of Baseline Characteristics by Treatment Group Voucher Training Voucher & Control Only Only Only Only Training Training Group Group Stratifying Variables In Amman, Salt, or Zarwa 0.43 0.44 0.43 0.44 Tawjihi score above median 0.55 0.55 0.55 0.55 Low desire to work full time 0.41 0.41 0.41 0.41 Is allowed to travel to the market alone 0.51 0.51 0.51 0.51 Other Baseline Variables Age Age 21.2 21.2 21.1 21.1 21.1 21.1 21.3 21.3 Married 0.14 0.16 0.12 0.13 Mother Currently Works 0.07 0.06 0.08 0.06 Father Currently Works 0.59 0.61 0.57 0.53 Has Previously Worked i l k d 0.15 0.18 0.16 0.16 Has a Job Set Up for After Graduation 0.05 0.08 0.10 0.08 Has Taken Specialized English Training 0.31 0.26 0.26 0.30 Household Owns Car 0.62 0.66 0.62 0.64 Household Owns Computer 0.72 0.75 0.74 0.70 Household Has Internet 0.28 0.18 0.26 0.26 Prefers Government Work to Private Sector 0.82 0.81 0.79 0.81 S Sample Size l Si 299 299 300 300 299 299 449 449 Note: The only statistically significant difference across groups is internet access which is significant at the 10% level.

Timeline Timeline • Baseline – July 2010 li l • Graduation – August 2010 g • Soft skills training: Sept ‐ Nov 2010 • Voucher period: Oct 2010 Aug 2011 • Voucher period: Oct 2010 ‐ Aug 2011 • Midline survey: April 2011 • Endline survey: December 2011