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Comprehensive programs that focus on skills can
reduce unemployment and upgrade skills in OECD countries
Reducing youth unemployment and generating more
and better youth employment opportunities are key policy challenges
worldwide. Active labor market programs for disadvantaged youth may be an
effective tool in such cases, but the results have often been disappointing
in Organisation for Economic Co-operation and Development (OECD) countries.
The key to a successful youth intervention program is comprehensiveness,
comprising multiple targeted components, including job-search assistance,
counseling, training, and placement services. Such programs can be
expensive, however, which underscores the need to focus on education policy
and earlier interventions in the education system.
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Systems combining structured learning on the job
with classroom training can ease youth unemployment
Youth unemployment has increased in many
industrialized countries following the recent global recession. However,
this reflects not only the cyclical shock, but also the crucial role of
institutions in structuring the transition from school to work. Vocational
training, in particular in a dual form combining vocational schooling and
structured learning on-the-job, is often considered to be one of the most
important policy solutions in combating youth unemployment. The evidence
available supports this perception, but the institutional requirements of a
successful training system also have to be taken into account from a policy
perspective.
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On-the-job learning is more important for
workers’ human capital development than formal training
Although early human capital theory recognized
the relevance of workers’ experience, its focus was on education and formal
training. Recent studies find that much of the performance of newly hired
workers is driven by learning by doing or learning from peers or supervisors
in the workplace. Descriptive data show that workers learn a lot from the
various tasks they perform on the job. Informal learning at work seems to be
relevant for all age groups, although it drives more of the performance of
younger workers. Informal learning is far more important for workers’ human
capital development than formal training courses.
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Staffing agencies could play a more prominent
role in the provision of training for the low qualified and previously
unemployed
Temporary work agencies use training as a
recruitment and retention argument when qualified labor is scarce. However,
short job assignments present a major obstacle for employers and employees
to increase investment in training. As temporary agency workers are mainly
low-qualified and often previously unemployed, paid work in combination with
training should lead to more sustainable employment. Adjustments in labor
market institutions could make the provision of training more attractive for
both staffing agencies and temporary agency workers.
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Penalties may last ten years or more, especially
for high-educated youth and in rigid labor markets
The Great Recession that began in 2008–2009
dramatically increased youth unemployment. But did it have long-lasting,
adverse effects on the careers of youths? Are cohorts that graduate during a
recession doomed to fall permanently behind those that graduate at other
times? Are the impacts different for low- and high-educated individuals? If
recessions impose penalties that persist over time, then more government
outlays are justified to stabilize economic activity. Scientific evidence
from a variety of countries shows that rigid labor markets can reinforce the
persistence of these setbacks, which has important policy implications.
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