Results – Systematic review of youth-oriented active labour market programmes
For many years, the Dutch Ministry of Foreign Affairs has been supporting several programmes that address youth unemployment in developing countries. It is not always easy to determine what interventions work best and are most effective. A systematic review that was published in 2017 provided more insight into the results achieved by youth-oriented, active labour market programmes. Since then, a lot of new research has become available in this area. For this reason, the earlier review has been updated.
Aim of the systematic review and meta-analysis
The update of the earlier review was conducted by a group of researchers from the International Labour Organization (ILO) and the World Bank. They looked into the effectiveness of youth-targeted, active labour market programmes (ALMPs): do they succeed in improving labour market outcomes of young people? The research synthesizes the empirical evidence of the past three decades from impact evaluations of such programmes.
Main characteristics of the review process
The review has benefitted from a surge in impact evaluations of youth employment programmes in recent years which resulted in a significantly expanded database. From this database, 228 reports were selected for the review. This report concerns studies that provide reliable insight into the effectiveness of over 170 programmes that have been carried out to improve youth labour market outcomes. To be included in this sample, the studies had to have been conducted in the period 1990-2020 and meet the following criteria:
Investigate an ALMP that was primarily targeted at young people (broadly applying the age range of 15 to 35 years) and was designed to address their labour market constraints;
Assess an ALMP that included at least one of the following interventions:
Skills training (outside the formal education system). with employability skills ranging from job-specific technical skills to non-technical soft (or core) skills, such as self-management, teamwork and communication, as well as digital skills.
Entrepreneurship promotion with the review clustering interventions across the following services: business advisory and/or mentoring; business skills; access to markets and value chains; direct credit or facilitating access to credit; monetary or in-kind (start-up or growth) grants; and micro-franchising initiatives or mechanisms.
Employment services, with the review distinguishing between services focused on counselling, placement and on financial support for the job search.
Wage subsidies, with the review distinguishing between programmes that reduce employers’ social security contributions or reduce their labour or wage cost and those that provide direct payments (subsidies) to young people.
Public works programmes and labour-intensive public employment programmes that offer direct, short- term employment to young people in infrastructure, social development or community projects often in times of crises.
Measure change in at least one primary outcome of interest, i.e.:
Outcome of interest
Outcome measures investigated
Employment
Employment probability; unemployment probability; participation rate; hours worked; unemployment duration and quality of employment (contract, fixed term, benefits)
Earnings
Earnings or income; household income; consumption; salary or wage
Business performance
Profits; sales; number of employees or jobs created; capital and investment; business creation; business survival
Estimate the causal effect of the intervention using an experimental or quasi-experimental evaluation design to identify counterfactual outcomes in the absence of the intervention.
In this research, effect size is given in terms of SMD – standardized mean differences. This study interprets effects ranging between 0 and 0,05 SMD as small. The effect is interpreted as medium between 0,05 and 0,20 SMD and when the SMD is between 0,20 and 1 SMD, the effect is large.
Key overall findings of the review
The most important findings on the effectiveness of ALMPs are summarized below. In the explanation of these findings, specific attention is paid to the results in low and middle-income countries and those in high-income countries.
The review documents a statistically significant positive impact of ALMPs across all country income groups and outcome categories.. The meta review shows an overall effect size across all studies of 0.08 SMD (standardized mean differences) with a 95 per cent confidence interval (CI) of 0.07–0.09 SMD.
ALMPs in high-income countries have slightly smaller impact on wages or job quality than ALMPs in low and middle-income countries. The effect size is 0.09 SMD (95 per cent CI: 0.06–0.11 SMD) for low-income countries, 0.10 SMD (95 per cent CI: 0.08–0.12 SMD) for middle-income countries and 0.06 SMD (95 per cent CI: 0.04–0.08 SMD) for high-income countries. For ALMPs in Africa, the study documents an overall effect size of 0.10 SMD (95 per cent CI: 0.08-0.13 SMD).
Overall, entrepreneurship promotion and skills training interventions have larger impacts than employment services and subsidized employment programmes. In low- and middle-income countries, entrepreneurship interventions have the largest impacts, followed by employment services and skills training interventions. This finding may be connected to a lack of private sector jobs, gaps in education systems, and the prevalence of labour market information asymmetries in low and middle-income countries. In such contexts, young workers are largely employed in the informal economy, young jobseekers have limited knowledge of job opportunities and there are insufficient information channels on job vacancies and career paths. Looking at employment outcomes, entrepreneurship promotion interventions outperformed consistently with skills training interventions. The strong role of entrepreneurship interventions becomes evident in the subsample analysis of low- and middle-income countries, where effect sizes are consistently positive, statistically significant and increasingly large.
In high-income countries, skills training interventions have the largest impacts in terms of better labour market outcomes. Wage subsidies and public works have only marginal impacts on average. Entrepreneurship interventions appear less effective than skills training in high-income countries, although the results are not always statistically significant, likely because of too few observations.
How an ALMP intervention is designed and implemented is an important determinant of better labour market outcomes. In low and middle-income countries, comprehensive and multipronged ALMPs and those that certify participation have larger impacts than individual interventions. In low-and middle-income countries, ALMPs that offer various services are able to better address the many constraints young people face. This effect is also evident and strongly significant among programmes that integrate soft skills.
An important factor in low- and middle-income countries seems to be that ALMPs enable young jobseekers to better signal their competencies and employability to employers. Interventions in these countries are slightly more successful when programmes last more than four months. One reason may be that youth in developing contexts face a larger number of different (though often interlinked) labour market barriers and require more intensive interventions. In high-income countries, programmes with a duration of four months or more do not show better results than programmes with a shorter duration.
In high-income countries, larger impacts are reported for interventions that are implemented only by public stakeholders as compared to those under public–private engagement. By contrast, in low- and middle-income countries, public–private partnerships are linked to larger impacts. While less consistent across specifications, this result may speak to the value of partnerships when reaching out to specific populations or addressing multiple labour market constraints in these contexts.
The impacts of ALMPs are larger for youth from disadvantaged backgrounds, young women, and participants younger than 25 years, particularly in low- and middle-income countries. This result highlights the important role that youth-targeted ALMPs may play in assisting those youth groups severely and disproportionately affected by the COVID-19 crisis, who are more prone to be in informal employment or in inactivity.
The findings suggest that interventions with a local or regional scope may be better adapted to specific youth labour market challenges. This offers promise for municipal or regional efforts to curve the youth employment challenge, for example through better targeting and outreach strategies.
Additionally, the review found an encouraging trend in the inclusion of cost information and cost–benefit analyses in impact evaluations since the mid-2010s. Nearly three quarters of available cost– benefit analyses reported that programme benefits surpassed programme costs. These analyses were overrepresented among skills training interventions. More attention is needed to assess the cost-effectiveness of other types of intervention. At the same time, this systematic review found limited evidence on the relative effectiveness across intervention components or from the combination of different intervention types.
