How the young in developing countries are excluded from work

by IMF Blog, 28 Mar 2019

Young people face tough labor markets and job shortages in countries all over the world. For example, about 20 percent of 15- to 24-year-olds in the average emerging market and developing economy are neither in work nor in school—this group includes countries such as Brazil, Ghana, and Malaysia, among others. This is double the share in the average advanced economy.

How can emerging markets close this gap? A recent IMF staff study points to a series of policies that can improve job prospects for everyone, but especially for young people not in school. The paper focuses on three policies in particular: greater gender equality in the workplace, better functioning labor markets, and more open and competitive product markets.

Our chart of the week shows that large and persistent gaps between the number of young women and men in the workplace are a big part of the story. On average, nearly 30 percent of young women in these economies are not working or learning. This is almost twice the rate for young men in a similar position.

On average, nearly 30 percent of young women in emerging market and developing economies are not working or learning.

Among emerging market and developing economy regional groups, the gaps are largest in Latin America and South and East Asia on average. Some—but not all—of the discrepancy can be explained by the economic and social consequences of having children.

But laws have a role to play as well. The reality is that when women are legally protected from employment discrimination, their rates of employment and participation improve without hurting men’s chances. For example, if sub-Saharan Africa strengthened its legal protections for women to the average in emerging Europe and Central Asia, the study estimates that young women’s employment and participation rates could be 10–15 percentage points higher, thus sharply narrowing the gender gap.

The paper also provides evidence that the policy proposals that can help young people do not require a trade-off between younger and older workers. They benefit everyone and help grow a country’s economy in a strong, sustainable way.