The Experience of Self-Employment Among Young People: An Exploratory Analysis of 28 Low- to Middle-Income Countries

Abstract

Youth unemployment has become the global “wicked” policy issue for governments and multilateral agencies with many regions experiencing endemically high levels. In response, governments and international organizations have introduced more active labor market interventions to address youth unemployment. Self-employment and entrepreneurship programs are seen as the key mechanisms to reduce unemployment, welfare dependency, and poverty. We use the International Labour Organization’s 2012 School-to-Work Transition Survey from 28 developing countries to provide new evidence of young people’s experience of job quality and associated working conditions in self-employment. We find that self-employment is not necessarily a favorable employment status in terms of the economic and social benefits it provides for young people. In countries often characterized by limited formal employment opportunities, a large informal sector and depressed local labor markets, self-employment can be seen as the only realistic way many young people can generate an income. Entry into self-employment can be more accurately described as a pragmatic coping mechanism by the young person and their family to get by rather than as evidence of entrepreneurship and a pathway to get on in terms of social mobility and poverty alleviation. We find little evidence that young people are making utility-maximizing decisions concerning their employment status. Furthermore, we argue that if youth employment policies overlook the importance and role of kinship networks in the uptake of self-employment, they are likely to be even less effective than other programs to promote entrepreneurship.