Unpacking youth unemployment in Latin America

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.Youth and Governance,Labor Markets,Population Policies,Adolescent Health,Labor Policies

Factors that predispose youth to risk in Mexico and Chile

About half of Latin America’s youth are considered"at risk,"meaning that they engage in or are at risk of engaging in risky behaviors that are detrimental to their own development and to the well-being of their societies. While child psychologists identify many factors that may cause some youth to engage in at-risk behaviors and others not to, only empirical evidence can identify the set that is relevant to a particular population. This paper uses youth surveys from Chile and Mexico to test which of a large set of potential factors are correlated with a range of risky behaviors among youth. These factors range from relationships with parents and institutions to household behaviors (abuse, discipline techniques) to social exclusion. The authors use stepwise regressions to sort out which variables best explain the observed variance in seven different risky behaviors. They find that higher socioeconomic status, a good relationship with parents and peers, strong connection with local governmental institutions and schools, urban residence, younger age, and spirituality emerge as key explanatory factors for all seven behaviors for boys and girls in both countries. This points to a wider range of policy entry points than currently used, including targeting parents and the relationship with schools.Adolescent Health,Youth and Governance,Population Policies,Health Monitoring&Evaluation,Gender and Health

Do minimum wages in Latin America and the Caribbean matter ? Evidence from 19 countries

Despite the existence of minimum wage legislation in most Latin American countries, there is little empirical evidence demonstrating its impact on the distribution of wages. In this study the authors analyze cross-country data for 19 Latin American and Caribbean (LAC) countries to gain an understanding of if and how minimum wages affect wage distributions in LAC countries. Although there is no single minimum wage institution in the LAC region, the authors find regional trends. Minimum wages affect the wage distribution in both the formal and, especially, the informal sector, both at the minimum wage and at multiples of the minimum. The minimum does not uniformly benefit low-wage workers: in countries where the minimum wage is relatively low compared to mean wages, the minimum wage affects the more disadvantaged segments of the labor force, namely informal sector workers, women, young and older workers, and the low skilled, but in countries where the minimum wage is relatively high compared to the wage distribution, it primarily affects wages of the high skilled. This indicates that the minimum does not generally lift the wages of all, but instead, it offers a wage into which employers can"lock in"wages that are already near that level. Thus, minimum wage legislation is more far-reaching than originally thought, affecting both the uncovered informal sector and those earning above the minimum. In addition, the relative level of the minimum wage is important for determining whose wages are affected.Labor Markets,Income,Wages, Compensation&Benefits,Corporate Social Responsibility,Child Labor

Early identification of at-risk youth in Latin America : an application of cluster analysis

A new literature on the nature of and policies for youth in Latin America is emerging, but there is still very little known about who are the most vulnerable young people. This paper aims to characterize the heterogeneity in the youth population and identify ex ante the youth that are at-risk and should be targeted with prevention programs. Using non-parametric methodologies and specialized youth surveys from Mexico and Chile, the authors quantify and characterize the different sub-groups of youth, according to the amount of risk in their lives, and find that approximately 20 percent of 18 to 24 year old Chileans and 40 percent of the same age cohort in Mexico are suffering the consequences of a range of negative behaviors. Another 8 to 20 percent demonstrate factors in their lives that pre-dispose them to becoming at-risk youth - they are the candidates for prevention programs. The analysis finds two observable variables that can be used to identify which children have a higher probability of becoming troubled youth: poverty and residing in rural areas. The analysis also finds that risky behaviors increase with age and differ by gender, thereby highlighting the need for program and policy differentiation along these two demographic dimensions.Adolescent Health,Youth and Governance,Health Monitoring&Evaluation,Population Policies,Gender and Health

Youth employment transitions in Latin America

Using panel data from labor force surveys in Argentina, Brazil, and Mexico, the paper maps out young people's paths from the classroom to the work place during the 1980s through the early 2000s. By decomposing transition matrices into propensity to move and rate of separation and estimating duration matrices, the authors follow young people's movements between school and work and between employment sectors to better understand the dynamics of youth employment, including where youth go upon leaving school, how long they spend in each state, and where they go upon leaving various employment states. The main conclusion of the study is that young people across all three countries follow a similar trend over their life cycle: they leave school to spend a short time in the informal sector, move to a formal position for longer spells, and finally become self-employed. The authors find evidence of decreasing segmentation between formal and informal sectors as workers age, a lower propensity for formal sector employees to return to school than workers in the same age cohort who are not in the formal sector, and that entry to self-employment is not subject to income constraints.Labor Markets,Youth and Governance,Adolescent Health,Tertiary Education,Labor Policies

Earnings Inequality Within and Across Gender, Racial, and Ethnic Groups in Latin America

Latin American countries are generally characterized as displaying high income and earnings inequality overall along with high inequality by gender, race, and ethnicity. However, the latter phenomenon is not a major contributor to the former phenomenon. Using household survey data from four Latin American countries (Bolivia, Brazil, Guatemala, and Guyana), we demonstrate (using Theil index decompositions as well as Gini indices, and 90/10 and 50/10 percentile comparisons) that within-group inequality rather than betweengroup inequality is the main contributor to overall inequality. Mlti-stage simulations in which the relatively disadvantaged gender and/or racial/ethnic group is treated more and more as if it were the relatively advantaged group tend to reduce overall inequality measures only slightly and in some cases have the effect of increasing inequality measures.earnings inequality, income inequality, gender, race, and ethnicity differences

Earnings inequality within and across gender, racial, and ethnic groups in four Latin American Countries

Latin American countries are generally characterized as displaying highincome and earnings inequality overall along with high inequality by gender, race, and ethnicity. However, the latter phenomenon is not a major contributor to the former phenomenon. Using household survey data from four Latin American countries (Bolivia, Brazil, Guatemala, and Guyana) for which stratification by race or ethnicity is possible, this paper demonstrates (using Theil index decompositions as well as Gini indices, and 90/10 and 50/10 percentile comparisons) that within-group earnings inequality rather than between-group earnings inequality is the main contributor to overall earnings inequality. Simulations in which the relatively disadvantaged gender and/or racial/ethnic group is treated as if it were the relatively advantaged group tend to reduce overall earnings inequality measures only slightly and in some cases have the effect of increasing earnings inequality measures.Access to Finance,,Gender and Development,Inequality,Gender and Law

The Effects of the Minimum Wage in Brazil on the Distribution of Family Incomes: 1996-2001

The Brazilian economy has long relied on the minimum wage, having first implemented a minimum in 1940. Shortly after taking office in 2003, Brazil’s President raised the minimum wage by 20 percent and promised to double the value of the minimum wage before his term ends in 2006. The usual rationale for minimum wage increases is to bring about beneficial changes in the income distribution, by raising incomes of poor and low-income families. The goal of this paper is to evaluate the efficacy of the minimum wage in Brazil in bringing about these changes in the income distribution. We examine data drawn from Brazil’s major metropolitan areas, studying the years after Brazil’s hyper-inflation ended. The estimates provide no evidence that minimum wages in Brazil lift family incomes at the lower points of the income distribution; if anything some of the evidence points to adverse effects on lower-income families.

From Aspirations to Action: The Role of Middle School Parents in Making the Dream of College a Reality

Looks at the number of parents who have taken steps to prepare for their children's college education by the time their children are in middle school

Sectoral allocation by gender of Latin American workers over the liberalization period of the 1990s

The recent restructuring of Latin American economies has renewed interest in the effects of trade liberalization, on labor markets, and on the gender division of labor. The author does not attempt to establish casuality between economic reforms, and the types of jobs that men and women hold. Instead, she provides a detailed description of the trends in male, and female formal, and informal sector participation during the economic reform period in Argentina, Brazil, and Costa Rica. The author first compares the gender composition of the formal, informal wage, and self-employment sectors in a year before reforms (1988 for Argentina, 1989 for Brazil, and Costa Rica), and a year after reforms implementation (1997 for Argentina, 1995 for Brazil and Costa Rica). Although women continued to be more likely than men to work in the informal wage sector, there is no trend of"masculinization"or"feminization"of the informal sector, or any other. Instead, in Argentina men have overtaken women as the most prevalent workers in the informal wage sector, while in Brazil, the opposite has occurred (as men move into self-employment). In Costa Rica there have been no statistical, observable changes. The author then considers the distribution across sectors within each gender group, to identify whether men, and women are more likely to select different sectors in the post-reform period relative to the pre-reform period. Among both men, and women in all three countries (except Brazilian men), workers have become more likely to hold informal wage jobs, and less likely to hold formal sector jobs. Trends in human capital accumulation explain these changes for both men, and women, while changes in gender roles, primarily in homecare and marriage, do not seem to have an effect.Health Monitoring&Evaluation,Labor Policies,Population&Development,Public Health Promotion,Environmental Economics&Policies,Health Monitoring&Evaluation,Environmental Economics&Policies,Population&Development,Banks&Banking Reform,Work&Working Conditions