Young Adults and Labor Markets in Africa

Abstract

Every year, millions of young adults join the labor market in Africa. This paper harmonizes surveys and censuses from 68 low- and middle-income countries to compare their job prospects to those of their counterparts in other low-income regions. We show that employment rates are similar at similar levels of development but that young adults in Africa are less likely to have a salaried job, especially when the size of their cohort is large. Building on existing evidence on the impacts of interventions targeting both the demand and supply sides of the labor market, we discuss policy priorities for boosting the growth of salaried job creation in the region.

Labor Market Power, Self-Employment, and Development

“…The creation of salaried jobs has been one of the hallmarks of sustained economic growth (Diao, Ellis, McMillan, and Rodrik, 2020;McMillan and Zeufack, 2022). This has motivated a large set of industrial and labor market policies promoting wage employment sector growth in poor countries, with generally modest results (World Bank, 2012;Bandiera, Elsayed, Smurra, and Zipfel, 2022). 1 Understanding the factors determining the success of these policies remains a pressing open question.…”

Labour Market Effects of Digital Matching Platforms: Experimental Evidence from Sub-Saharan Africa

“…Youth unemployment is a major policy concern in Africa. While one in every five people born on the continent is looking for a job (Bandiera et al, 2022), unemployment often co-exists with unmet labour demand (Banerjee and Sequeira, 2020). A potential explanation for this is frictions that prevent employers linking with qualified job candidates (Chade et al, 2017).…”

“…We study a related low-cost mechanism that also may help to address information asymmetries, including screening costs: use of digital matching platforms. Due to improvements in access to technology, particularly smartphones (Bandiera et al, 2022), these platforms are increasingly used by both employers and job-seekers in a wide range of contexts, including lower-income Africa. However, despite the rapid growth of digital jobs platforms across the globe (ILO, 2021), there is limited rigorous causal evidence regarding their ultimate benefits to workers, especially in developing country contexts or in (lower-skilled) informal labour markets.…”

The Puzzle of Educated Unemployment in West Africa

“…Our paper also contributes to a rapidly expanding literature analysing the interactions between unemployment, self-employment and wage employment in developing labour markets. Bandiera et al (2022) aptly describe a 'vicious cycle' in African labour markets, 'where most people run subsistence enterprises because there are no salaried jobs and there are no salaried jobs because most enterprises operate at subsistence levels.' In line with this view, Rud and Trapeznikova (2021) highlight the weakness of the wage employment sector as a consequence of important labour market frictions and entry barriers in Sub-Saharan Africa.…”

“…However, and fortunately, robust answers are emerging from a literature studying labour market frictions and self-employment in developing countries at the micro level, with the use of observational data and experiments. For this, Bandiera et al (2022) o ers an excellent review. We note that in line with our findings, many of the proposed solutions therein target an expansion of the still-fragile private sector.…”