Abstract
In a number of countries, youth unemployment is a pressing economic and political concern. In India, 54 percent of the country's population of 1.21 billion is below the age of 25 and faces a high rate of (disguised) unemployment. To augment youth employment, the Government of India has launched a number of skills training programs. This paper deals with participation in and the impact of one of these programs (DDUJKY) located in rural Bihar, one of India's poorest states. The analysis is based on data collected in mid-2016 and compares training participants with non-participants who applied for the scheme but eventually did not attend. We find that the training program squarely reaches the intended target group - rural poor youth. Initially, the program leads to a 29 percentage point increase in the employment rate of the trained graduates. However, two to six months after the training, the employment effect of the program drops to zero. A third of the placed graduates leave their jobs due to caste-based discrimination and another third leave due to a mismatch between the salaries offered and their living costs. The upshot is that while the training program enhances job market prospects, other labor market factors undo the positive effects.
Highlights
According to the 2013 World Development Report (WDR), worldwide, some 200 million people, including a disproportionate share of about 75 million who are below the age of 25 are unemployed and actively looking for work
These statistics allow us to gauge whether the training program does target the rural poor and to examine whether our empirical approach, which is based on comparing those who participate in the training program versus those who expressed an interest but did not participate, delivers a credible control group
The proportion of scheduled caste/tribe (SC/ST) in the sample is substantially higher than the proportion for Bihar (17.3% according to Census 2011)
Summary
According to the 2013 World Development Report (WDR), worldwide, some 200 million people, including a disproportionate share of about 75 million who are below the age of 25 are unemployed and actively looking for work. Consistent with this policy priority, on September 25, 2014, the Government launched the ‘Deen Dayal Upadhyaya Grameen Kaushal Yojana’ (DDUGKY), a program for training, skill building and job placement intended for rural youth from poor families. Despite the large number of skills training and employment programs operating in India, and the considerable resources expended on such schemes, systematic evaluations of their impact on creating employment as well as assessing whether such schemes reach the intended population, are limited.
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