What we’re reading about designing effective vocational training programs for youth

Supporting youth to acquire in-demand skills may be more important than ever to address continuously rising inequality.   Recent data shows that young people continue to be among the groups most severely impacted by the economic effects of COVID-19. The resulting losses in jobs and learning can have long-lasting negative repercussions for youth. One reason is that skills and employability deplete increasingly the longer workers remain out of work.

Post-educational vocational training programs support the unemployed to upgrade and adjust their skills to current demand on the labor market.  Recent studies suggest such training programs can mitigate long-term consequences of job-loss, in particular following recessions. Training programs are also vital to address existing inequalities in access to education and employment opportunities for disadvantaged groups.

Recent impact evaluations provide a wealth of evidence of what works in vocational training, but we lack an up-to-date synthesis of this literature. Existing reviews of active labor market programs commonly report that skills training programs have moderate impacts on labor market outcomes. While this provides valid grounds for critique, these impacts are not much different from those of other active labor market programs and may be even higher in the longer term. However, we are missing reviews that assess vocational training programs in detail – eliciting factors that matter for their success and uncover mechanisms behind their effectiveness. Particularly important would be to better understand success factors in the specific context of low-income countries.

To fill this knowledge gap, we conducted a systematic stocktaking of recent impact evaluations of vocational training programs targeted at young people globally. We extracted more than 1,650 impact estimates from 89 studies, many of them experimental evaluations of programs in lower- and middle-income countries. Our analysis sheds light on the effectiveness of various design features and their relevance in different labor market contexts. In this blog, we showcase recent studies that highlight some key design elements of successful vocational trainings: being demand-driven, delivering transferable skills, providing certification, and including support offers to lower participation barriers.

Essential readings

• Local employers’ information on skill demand can improve the effectiveness and employment impacts of public-sponsored job training programs, partially because trainees find jobs in large, high-growth firms in low-growth municipalities. (O'Connell & Mation, Working Paper, June 2021)
• Sector-focused training programs targeted at low-wage workers in the US generate substantial and persistent earnings gains (Katz et al., Journal of Labor Economics, April 2022)
• Young people increase their labor market expectations when they are given certificates for their soft skills. Managers also revise their assessments of the workers’ skills upwards – leading to higher earnings for workers. (Bassi and Nansamba, The Economic Journal, February 2022)
• In Côte d’Ivoire, subsidized dual apprenticeships combining on-the-job training and theoretical training improves youth’s skills and earnings four years later, expands youth demand for training, and increases the numbers of apprenticeships filled. (Crepon & Premand, IZA, November 2019)
• For unemployed youth in Uganda, both subsidized vocational training and firm-provided training led to significant increases in sector-specific skills and labor market outcomes. Impacts from firm-provided training materialize quickly, but fade over time; vocational training gains emerge slowly, but are long lasting, resulting in a higher employment and earnings profile. (Alfonsi et al., Econometrica, November 2020)
• For low-income countries with a lack of wage employment opportunities and workers with low skills levels, examples of successful training programs include: incentives for training providers, financial support for participants, and gender considerations. (Jonathan Stöterau, Kiel Institiute for the World Economy (PEGNet Policy Brief), May 2019)
• Many recent evaluations of labor market policies have found that they are much less effective than policymakers typically assume, with no significant impact on either employment or earnings. One reason is that urban labor markets appear to work reasonably well in many cases, with fewer market failures than is often thought. The review discusses examples of job-creation policies that offer promise, as well as lessons for impact evaluation and policy in this area. (McKenzie, The World Bank Research Observer, August 2017)
• This study reviews 113 impact evaluations of youth employment programs from around the world, providing practitioners with a better understanding of how certain design features contribute to successful youth employment programs. (Kluve et al., World Development, February 2019)

Broader jobs agenda

• Policies that increase firm productivity are more effective in expanding wage employment and increasing workers’ earnings than other interventions that improve workers’ skills or decrease firm entry cost. (Amodio et al., IZA Discussion Papers, August 2022)
• Worker productivity and wages grow with tenure and experience . Several key findings emerge from this paper, including that on-the-job productivity growth exceeds wage growth, and previous experience is a substitute, but a far less than perfect one, for on-the-job tenure. (Caplin et al., NBER Working Paper Series, August 2022)
• Cutting long-term benefit duration effectively brings workers (that have not spent too much time in non-employment) back into the labor force. (Domènech-Arumí & Vannutelli, ECARES working paper, July 2022).
• In Denmark, reforms that expand language training for adult refugees and improved their economic integration, had significant intergenerational spillover effects in terms of higher completion rates from lower secondary school and lower juvenile crime rates. (Foged et al., NBER Working Paper Series, August 2022)
• Integrating survey data and publicly available geospatial indicators can greatly improve state-level estimates of male and female labor force participation and unemployment rates, as well as municipal estimates of male and female labor force participation. (Merfeld et al., World Bank, June 2022).
• In Burkina Faso, the profits and employment recorded by grant beneficiaries are not different when compared with the profits and employment in the control group. They do, however, report better innovation. (Grimm et al., World Bank, June 2022)

COVID-19 related articles

• This paper presents evidence on the extent to which a set of real-time indicators tracked changes in gross domestic product across 142 countries in 2020. The real-time indicators include Google mobility, Google search trends, food price information, nitrogen dioxide, and nighttime lights. (Ten et al., World Bank, June 2022)
• The initial effects of the pandemic exacerbated preexisting economic gaps between areas affected by fragility, conflict, violence, and other areas, indicating that an even larger effort will be necessary in these areas to recover from COVID-19, with implications for funding needs and policy as well as program design. (Tabakis et al., World Bank, June 2022)
• The COVID-19 pandemic has further increased women’s economic vulnerabilities, with women making up 79 percent of the COVID-19 related job losses in the Turkish Cypriot Community (TCc). Investing in women’s economic engagement is a priority for the TCc economic recovery and to boost its resilience to shocks. (Tinjic, World Bank, August 2022)
• Since March, repeated waves of COVID-19 have put an even greater number of children under the age of five at risk of stunting. Despite the challenge of stunting in Pakistan, The Pakistan Multisectoral Nutrition Strategy 2018 demonstrates that nutrition is high on Pakistan's policy agenda. (World Bank, August 2022)

This blog is based on the September 2022 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.