ILO/GTZ/WHO/World Bank, Torino, October 2008

Making the case for investing in youth

2

Your tasks

What do you need to do? Convince the Finance Minister to

invest in programs that benefit youth.

How can you do it? Think from the perspective of the

Finance Minister.

Use her language to make your point.

Base your argument on evidence.

3

The Finance Minister

What does she care about? Economic growth

Jobs

Government balances

External balances

Politics

The entire economy, not just youth.

4

The Finance Minister

What constraints and incentives does she face? The short run – election cycles may discourage

long-term human capital investments

A wide variety of interest groups – all of whom compete for limited resources

Political survival – she is sensitive to demands from her bosses and from the people

Fiscal space – limits how much she is able to spend

5

The fundamental question:

How does your proposal achieve

her broader objectives (e.g. jobs,

growth) while satisfying her

constraints (e.g. short horizon,

political economy)?

6

Three basic principles

Opportunity costs Not investing is costly Higher returns than to other investments

Financial and fiscal responsibility Reallocating resources to things that work

Political economy Policymakers are concerned about large

numbers of unemployed, disaffected youth.

7

Opportunity costs

Resources are fixed – otherwise we’d spend money on everything.

We have to set priorities – some things we fund, others we don’t.

We want to invest in things that yield the greatest payoff.

Must understand costs and benefits.

8

Endogenous opportunities

Positive externalities – your investments may provide benefits to other people and in other sectors.

Complementarity – investments now enhance the returns to future investments.

Dynamic “fiscal space” – what you do this year changes future opportunities.

9

That’s fine, but why youth?

Demographic window of opportunity

New environment, new challenges Global integration

Changing labor demands

HIV/AIDS

Youth is when adult habits are established.

10

The demographic window

Under-5 mortality rate per 1000 live births

0

50

100

150

200

250

300

1950 1960 1970 1980 1990 2000 2010

Sub-SaharanAfrica

Middle East &North Africa

South Asia

East Asia &Pacific

Latin America &Caribbean

Source: World Bank

11

The demographic window

Year of Peak Youth Population

19501960

19701980

19902000

20102020

20302040

2050

Japan

Italy

Window closed

China

Chile

Window will close < 10 years

India

Bolivia

Window closes >10 years

Afghanistan

Uganda

Window has yet to open

Similar countries: Ethiopia, Niger, Timor Leste

Similar countries: Indonesia, Thailand, Kazakhstan, Iran

Similar countries: Ireland, Germany, France, Czech Rep.

Similar countries: Egypt, Colombia, Nicargua, Morocco

Year window opens

Year window closes

12

The demographic window

Source: WDR

13

Not investing can be costly

Change in GDP growth due to early school leaving

Source: World Bank 2007

-60

-50

-40

-30

-20

-10

0

Colombia Dominican Republic El Salvador Guatemala

Per

cen

t

14

Not investing can be costly

HIV prevalence rate (%) in young (15-24) pregnant women

0

10

20

30

40

50

Source: UNAIDS

15

Partly because youth don’t have the right information

0 20 40 60 80 100

MaliRwanda Nigeria

Burkina Faso Mozambique

Zambia Cameroon

Uganda NamibiaGhana Kenya

Tanzania

 Male  Female

Percent of young people who are aware of multiple ways to prevent HIV/AIDS

Source: DHS

16

Partly because youth don’t have the right information

Percent of young women, 15-24, who can read a simple sentence or know condoms can prevent HIV/AIDS after six years of primary school

Inadequate preparation for adolescence improve quality of basic education

Relevance of education for jobs curriculum reform, flexibility in school systems

0

10

20

30

40

50

60

70

80

90

100

Ghana Zambia Ghana Zambia

Literacy Condom Knowledge

Source: DHS

17

Information matters

Measured = actual earnings based on worker surveys

Perceived = earnings perceived by 8th grade boys if they finish primary or secondary school

Measured returns significantly exceed perceived returns

Program provided information campaigns in AND outside schools

Source: Jensen (2006)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

complete primary complete secondary

perceived measured

Perceived and actual benefits from schooling in the Dominican Republic

DR pesos per week

18

to facilitate entry to work

Promote growth that leads to greater youth employment Reform institutions that inhibit job creation for and mobility of unskilled youth

Excessively high minimum wages or employment protection Opening up opportunities to migrate Source: WDR

19

Annual cancer deaths, males, United States

Adult outcomes are a function of early choices

Source: WDR

0

10

20

30

40

50

60

70

80

1950 1955 1960 1965 1970 1975 1980 1985 1990

Dea

ths

per

100,

000

mal

es

Lung Oral cavity and pharynx Esophagus Larynx

NB: smoking peaked in 1945

20

Smoking prevalence among youth

And in developing countries?

Source: WDR

0 10 20 30 40 50 60

Haiti

Uganda

Zambia

Kenya

Mexico

Armenia

Russia

Vietnam

Nepal

Indonesia

Percentage

Boys Girls

21

0 5 10 15 20 25 30 35 40 45

NepalIndia

Burkina FasoMalaw i

MaliKazakhstan

ZambiaBenin

KyrgyzUgandaGhanaKenya

HaitiMorocco

Zimbabw eArmenia

CameroonColombia

NicaraguaBoliviaTurkeyEgypt

Percentage

Underweight Overweight

Girls more likely to be overweight than underweight

Source: WDR

Obesity and related diseases

22

to close ineffective programs “boot camps” for young offenders, paying

teachers for test scores, migration restrictions

to promote effective programs public-private partnerships, community

governance, vouchers for services

to test potentially effective programs wage subsidies, apprenticeship programs,

entrepreneurship training, “life skills” training, “youth-friendly” services

Finally, use evidenceuse evidence

23

Betcherman’s youth labour review

(14 of 289)

positive impact and cost-effective

positive impact

positive, objectively-measured

impact

WDR review of youth HIV evaluations

(6 of 300+)

And learn from learn from experienceexperience