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Unpacking youth unemployment in Latin America

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  • Cunningham, Wendy

Abstract

High youth unemployment rates may be a signal of difficult labor market entry for youth or may reflect high churning. The European and United States literature finds the latter conclusion while the Latin American literature suggests the former. This paper uses panel data to examine whether Latin American youth follow OECD patterns or are, indeed, unique. By decomposing transition matrices into propensity to move and rate of separation matrices and estimating duration matrices, the authors find that Latin American youth do follow the OECD trends: their high unemployment reflects high churning while their duration of unemployment is similar to that of non-youth. The paper also finds that young adults (age 19-24) have higher churning rates than youth; most churning occurs between informal wage employment, unemployment, and out-of-the labor force, even for non-poor youth; and unemployment probabilities are similar for men and women when the analysis control for greater churning by young men. The findings suggest that the"first employment"programs that have become popular in the region are not addressing the key constraints to labor market entry for young people and that more attention should be given to job matching, information, and signaling to improve the efficiency of the churning period.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5022.

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Date of creation: 01 Aug 2009
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Handle: RePEc:wbk:wbrwps:5022

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Keywords: Youth and Governance; Labor Markets; Population Policies; Adolescent Health; Labor Policies;

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  1. Quintini, Glenda & Martin, John P. & Martin, S├ębastien, 2007. "The Changing Nature of the School-to-Work Transition Process in OECD Countries," IZA Discussion Papers 2582, Institute for the Study of Labor (IZA).
  2. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, World Bank Group, vol. 13(2), pages 275-302, May.
  3. Richard B. Freeman & David A. Wise, 1982. "The Youth Labor Market Problem: Its Nature Causes and Consequences," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 1-16 National Bureau of Economic Research, Inc.
  4. Katharine G. Abraham & Robert Shimer, 2001. "Changes in Unemployment Duration and Labor Force Attachment," NBER Working Papers 8513, National Bureau of Economic Research, Inc.
  5. Hemmer, Hans-R. & Mannel, C., 1989. "On the economic analysis of the urban informal sector," World Development, Elsevier, Elsevier, vol. 17(10), pages 1543-1552, October.
  6. Bosch, Mariano & Maloney, William F., 2007. "Comparative Analysis of Labor Market Dynamics Using Markov Processes: An Application to Informality," IZA Discussion Papers 3038, Institute for the Study of Labor (IZA).
  7. Freeman, Richard B., 1999. "The economics of crime," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 52, pages 3529-3571 Elsevier.
  8. World Demographic and Ageing Forum & David Bell & Alison Bowes & Axel Heitmueller, 2007. "Did the Introduction of Free Personal Care in Scotland in a Reduction of Informal Care?," Journal Article, World Demographic and Ageing Forum y:2007:i:1, World Demographic and Ageing Forum.
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