Evaluating Labor Market Programs

Joanne Asquith Independent Evaluation, ADB

Active Labor Market Programs

Increasingly relevant in developing countries to tackle growing unemployment and underemployment problems Job search assistance, wage subsidies, training and public works But how much reliance should countries place on ALMPs?

Evidence for OECD (2004)

Employment Services: limited use where there is a lack of demand for labor Training for the unemployed: modest but results more positive for women than for men Retraining workers in mass-layoffs: no positive impacts Training for youth: almost always unsuccessful. Better to invest in earlier education. Better results in developing countries that combine training with job search assistance Wage employment subsidies: no positive impact Public works: effective short term safety net but do not improve future employment prospects Micro-Enterprise development: some evidence for older and more educated participants but take up is low

Employment Generation Programs

Developing Country Experience

 Very few employment subsidies in Asia Work best when targeted at hard to reach groups Affirmative action in the OECD to create additional work places for those otherwise discriminated Can work when subsidies target employees rather than employers

 Vocational Training Youth and women record significantly higher success rates than do middle aged men Classroom combined with on-the-job training works best Life skills and counseling

Public Works Useful as safety nets Little evidence that they help participants find better jobs Some programs build in additional technical and life-skills support or links to micro finance (Bangladesh) But very few public works programs succeed in improving long-term employability of participants

 Micro enterprise development More traction in Asia Tends to benefit the better off May help sustain business but not necessarily create formal jobs

Summary of Findings
Evidence is clear that public employment programs have a positive effect on short-term employment So good instrument of choice in battling economic downturns and seasonality in agricultural or business cycles, natural disasters, or macro economic crises

They can act as unemployment insurance for informal workers, who are not included in the contributory social security system
However, these programs are not successful in raising employment opportunities beyond the program Not clear that these programs can address long-term informality in the labor market

Experience of Latin America

Growth sharply accelerated , inequality declined Inclusive labor markets, expanded safety nets, improved educational outcomes and macro stability Participation of women increased 15% from 2000 2010 Female labor market income contributed 30% of reduction in extreme poverty

Labor Market Policies in Latin America

Gender parity in education Increasing investment in human capital Decline in fertility and later age of marriage Traditional focus on TVET and job intermediation works best when combined with interventions to expand female empowerment Childcare and flexible working hours Policies to address gender based violence and teenage pregnancy are important Need to focus on female single-headed households Expand the knowledge base of what works to promote greater gender equity

Conclusions
Evidence is mixed Programs do not necessarily improve the employment prospects or employability of participants but can work as safety nets Enhance capacity of beneficiaries Invest in impact evaluation

Thank You!
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