Adolescents and Young Adults in Latin America, Critical Decisions at a Critical Age: Young Adult Labor Market Experience

This study explores and analyzes the labor market experience of young adults in 18 Latin American countries. For men, the period of young adulthood (18-25 years of age) was found to be one of smooth convergence towards patterns associated with full adulthood. Females show more complex and less clear-cut trajectories, which seem to be affected by entrance into motherhood. Educational attainment shapes the labor market experience of young adults, regardless of gender: the more educated postpone entry into the market, and more educated women display higher participation rates as they reach late young adulthood. Also, during young adulthood, the more educated display higher unemployment rates, possibly because they are newer in the market, but their rate of participation in the informal sector of the economy is lower. Female labor market experience was found to be affected by motherhood. In many countries women with lower levels of education leave the labor market during young adulthood, while women with higher levels of education postpone such exits and are also less likely to leave. Finally, young Latin American adults with college education were found to experience rapid labor market absorption, featuring swift entry into the formal sector, high participation rates and low and rapidly decreasing unemployment rates. Earnings equations show that education, experience and gender have significant and positive effects on the earnings of young adults. In general, returns from education increase with age and educational level, with the sharpest marginal change occurring in early young adulthood. Return for education and experience of young adults tend to be close to those obtained by prime age adults, although in the case of experience the returns obtained by young adults tend to be larger. In general, formal education has a consistently larger effect than experience. Although the previous findings hold for young adults in almost all countries included in the study, it is important to note that the individual countries results show large variation in the levels of all coefficients (education, experience and gender) and among age groups.