Making The Case Ml


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  • Making The Case Ml

    1. 1. ILO/GTZ/WHO/World Bank, Torino, October 2008 Making the case for investing in youth
    2. 2. Your tasks <ul><li>What do you need to do? </li></ul><ul><ul><li>Convince the Finance Minister to invest in programs that benefit youth. </li></ul></ul><ul><li>How can you do it? </li></ul><ul><ul><li>Think from the perspective of the Finance Minister. </li></ul></ul><ul><ul><li>Use her language to make your point. </li></ul></ul><ul><ul><li>Base your argument on evidence . </li></ul></ul>
    3. 3. The Finance Minister <ul><li>What does she care about? </li></ul><ul><ul><li>Economic growth </li></ul></ul><ul><ul><li>Jobs </li></ul></ul><ul><ul><li>Government balances </li></ul></ul><ul><ul><li>External balances </li></ul></ul><ul><ul><li>Politics </li></ul></ul><ul><ul><li> The entire economy, not just youth. </li></ul></ul>
    4. 4. The Finance Minister <ul><li>What constraints and incentives does she face? </li></ul><ul><ul><li>The short run – election cycles may discourage long-term human capital investments </li></ul></ul><ul><ul><li>A wide variety of interest groups – all of whom compete for limited resources </li></ul></ul><ul><ul><li>Political survival – she is sensitive to demands from her bosses and from the people </li></ul></ul><ul><ul><li>Fiscal space – limits how much she is able to spend </li></ul></ul>
    5. 5. The fundamental question: <ul><li>How does your proposal achieve her broader objectives (e.g. jobs, growth) while satisfying her constraints (e.g. short horizon, political economy)? </li></ul>
    6. 6. Three basic principles <ul><li>Opportunity costs </li></ul><ul><ul><li>Not investing is costly </li></ul></ul><ul><ul><li>Higher returns than to other investments </li></ul></ul><ul><li>Financial and fiscal responsibility </li></ul><ul><ul><li>Reallocating resources to things that work </li></ul></ul><ul><li>Political economy </li></ul><ul><ul><li>Policymakers are concerned about large numbers of unemployed, disaffected youth. </li></ul></ul>
    7. 7. Opportunity costs <ul><li>Resources are fixed – otherwise we’d spend money on everything. </li></ul><ul><li>We have to set priorities – some things we fund, others we don’t. </li></ul><ul><li>We want to invest in things that yield the greatest payoff. </li></ul><ul><li>Must understand costs and benefits . </li></ul>
    8. 8. Endogenous opportunities <ul><li>Positive externalities – your investments may provide benefits to other people and in other sectors. </li></ul><ul><li>Complementarity – investments now enhance the returns to future investments. </li></ul><ul><li>Dynamic “fiscal space” – what you do this year changes future opportunities. </li></ul>
    9. 9. That’s fine, but why youth? <ul><li>Demographic window of opportunity </li></ul><ul><li>New environment, new challenges </li></ul><ul><ul><li>Global integration </li></ul></ul><ul><ul><li>Changing labor demands </li></ul></ul><ul><ul><li>HIV/AIDS </li></ul></ul><ul><li>Youth is when adult habits are established. </li></ul>
    10. 10. The demographic window Under-5 mortality rate per 1000 live births Source: World Bank
    11. 11. The demographic window
    12. 12. The demographic window Source: WDR
    13. 13. Not investing can be costly Change in GDP growth due to early school leaving Source: World Bank 2007
    14. 14. Not investing can be costly HIV prevalence rate (%) in young (15-24) pregnant women Source: UNAIDS
    15. 15. Partly because youth don’t have the right information Percent of young people who are aware of multiple ways to prevent HIV/AIDS Source: DHS
    16. 16. Partly because youth don’t have the right information Percent of young women, 15-24, who can read a simple sentence or know condoms can prevent HIV/AIDS after six years of primary school <ul><li>Inadequate preparation for adolescence </li></ul><ul><li>improve quality of basic education </li></ul><ul><li>Relevance of education for jobs </li></ul><ul><li>curriculum reform, flexibility in school systems </li></ul>Source: DHS
    17. 17. Information matters <ul><li>Measured = actual earnings based on worker surveys </li></ul><ul><li>Perceived = earnings perceived by 8 th grade boys if they finish primary or secondary school </li></ul><ul><li>Measured returns significantly exceed perceived returns </li></ul><ul><li>Program provided information campaigns in AND outside schools </li></ul>Source: Jensen (2006) Perceived and actual benefits from schooling in the Dominican Republic DR pesos per week
    18. 18. to facilitate entry to work <ul><li>Promote growth that leads to greater youth employment </li></ul><ul><li>Reform institutions that inhibit job creation for and mobility of unskilled youth </li></ul><ul><ul><li>Excessively high minimum wages or employment protection </li></ul></ul><ul><ul><li>Opening up opportunities to migrate </li></ul></ul>Source: WDR
    19. 19. Adult outcomes are a function of early choices Annual cancer deaths, males, United States Source: WDR NB: smoking peaked in 1945
    20. 20. And in developing countries? Smoking prevalence among youth Source: WDR
    21. 21. Obesity and related diseases Girls more likely to be overweight than underweight Source: WDR
    22. 22. <ul><li>to close ineffective programs </li></ul><ul><ul><li>“ boot camps” for young offenders, paying teachers for test scores, migration restrictions </li></ul></ul><ul><li>to promote effective programs </li></ul><ul><ul><li>public-private partnerships, community governance, vouchers for services </li></ul></ul><ul><li>to test potentially effective programs </li></ul><ul><ul><li>wage subsidies, apprenticeship programs, entrepreneurship training, “life skills” training, “youth-friendly” services </li></ul></ul>Finally, use evidence
    23. 23. Betcherman’s youth labour review (14 of 289) WDR review of youth HIV evaluations (6 of 300+) And learn from experience