3 CONTENTS Solutions To Youth Unemployment THE JOURNEY: CONTEXT 04 IDENTIFYING BOTTLENECKS 10 DESIGNING IDEAS BUCKET: BEHAVIORALLY INFORMED SOLUTIONS 06 BEHAVIORALLY INFORMED SOLUTIONS 12 ENTRY POINTS FOR INTERVENTIONS 08 MEASURING IMPACT 18 CRAZY UNTESTED IDEAS 21 DIAGNOSTIC MAPPING 09 LEARNING FROM FAILURES 19 REFERENCES 22 4 Behavioral Bites Solutions To Youth Unemployment 5 CONTEXT The world is wasting an extraordinary demographic dividend. There are more MINDSETS, BELIEFS, AND BEHAVIORS young people eligible for work living today than ever before in history, yet they are disproportionately affected by unemployment and inactivity. Young people For young people in low-income countries, success in the labor market are over three times more likely to be unemployed than adults.1 Rates of idleness requires resilience, self-belief, and entrepreneurialism. To help them, among youth differ from country-to-country, but can be as high as 50 percent.2 policy makers can develop interventions that simplify the search process and provide psycho-social capabilities to support their success in the This policy brief provides a framework for applying behavioral insights to economic environment. youth unemployment problems, building on rigorous evidence from across the world. Many drivers of youth Young people are over three inactivity are structural and require traditional interventions. times more likely to be But unemployment and inactivity unemployed than adults. interacts interdependently with psycho-social wellbeing and competence. Solutions to structural problems can be improved by integrating 3 behavioral solutions. Support young Help young people more people in developing effectively search for In low-income countries, full-time jobs are generally scarce and beyond the livelihood goals and work and maintain reach of poor young people. Instead, people on low incomes must develop a the self-belief to motivation in the face “portfolio of work” to get by. The cognitive resources required to navigate effectively pursue of setbacks. and sustain scattered and unpredictable working conditions are large. While their aspirations. permanent full-time jobs provide reliable income, security, and protections by default, poor youth must take extra steps to solve these challenges. 1. International Labor Organization (2017) The World Employment and Social Outlook 2017 – Trends. Geneva:  International Labour Office. Provide young people Help young 2. World Development Report 2013: Jobs. Washington, DC: World Bank. with tools to more people develop the 3. Thern, E., de Munter, J., Hemmingsson, T. and Rasmussen, F., 2017. Long-term effectively signal their socio-emotional effects of youth unemployment on mental health: does an economic crisis quality and employers skills and grit to make a difference? J Epidemiol Community Health, pp.jech-2016. to hire them. sustain their jobs. 4. Cannon, M.D. and Edmondson, A.C., 2005. Failing to learn and learning to fail (intelligently): How great organizations put failure to work to innovate and improve. Long Range Planning, 38(3), pp.299-319. 6 Behavioral Bites Solutions To Youth Unemployment 7 DESIGNING BEHAVIORALLY 01. 03. INFORMED SOLUTIONS • Identify the problem • Set up process for randomization • Collect background information • Trial intervention and available data Behaviorally informed policy emphasizes the importance of context for • Monitor treatment and control groups • Diagnostic sessions to decision making and behavior. It examines the social, psychological, and develop behavioral map • Analyze data at endline economic factors that affect what people think and do. It addresses details in • Fieldwork to finalize behavioral map bureaucracies, technologies, and service delivery that are often overlooked in standard policy design but that can dramatically influence the effectiveness of development programs and projects, especially in low-income contexts. Behaviorally informed policy can provide creative solutions to difficult 01. 03. challenges, often at low cost. Definition Implementation & Diagnosis & Evaluation HOW WE WORK 05. Re-define & Re-diagnose CONTEXT- EMPIRICAL AGILE DRIVEN 02. 04. We test multiple Results are used Design Adapt Resources are designs, each to learn and adapt devoted to based on different the program carefully define assumptions design and feed the behaviors underpinning about individuals’ choices and into a new round of definition, 02. 04. the development behavior. diagnosis, design, • Develop list of potential interventions • Identify key learnings challenge and implementation, appropriate and testing; • Narrow down to most feasible • Identify areas for further work diagnosis of this process the causes of those behaviors. of refinement continues as 05. the intervention • Investigate constraints to scaling work is scaled up. • Identify furtherbehavioral challenges 8 Behavioral Bites Solutions To Youth Unemployment 9 ENTRY POINTS FOR INTERVENTIONS DIAGNOSTIC MAPPING Behavioral insights are most cost-effective when they are integrated into There are certain crucial aspects of livelihood development that are often existing institutions and systems. The Mind, Behavior, and Development Unit overlooked. To understand how young people navigate their economic (eMBeD) at the World Bank works with service providers to help them make environment, we broaden standard policy analysis in two ways: small changes to the way they operate in order to help them more effectively support their service users. JOB CENTERS ARE OFTEN THE MAIN PUBLIC SERVICE PROVIDER TASKED WITH HELPING PEOPLE FIND WORK. WE ZOOM IN TO IDENTIFY THE SPECIFIC Job centers and similar civic institutions can use behavioral insights to help their frontline staff interact with beneficiaries and enhance the tools THOUGHTS, CHOICES, AND BEHAVIORS that must they use in ways that encourage job-seeking activity. They also can harness be undertaken to be successful in a livelihood development. simple technologies like SMS messages to remind job-seekers about This helps identify psycho-social bottlenecks that may programs and to inform them of job opportunities in a timely manner. undermine individuals’ ability to take advantage of the available economic opportunities. ENGAGING FIRMS IS KEY TO REDUCING YOUTH UNEMPLOYMENT. Firms can improve the quality of their workforce by leveraging behavioral insights to reduce the biases that they frequently make in hiring that may lead them to exclude non-traditional candidates such as women and ethnic minorities. Similarly, they can implement incentive schemes and other mechanisms to maximize worker retention, effort, and productivity. TVETS (Technical Vocational Education and Training) ARE IMPORTANT FOR YOUTH TO ACQUIRE SKILLS. Recently, many governments have relied on these educational WE ZOOM OUT TO EXAMINE THE SOCIAL CONTEXT IN institutions to help reduce unemployment and enhance the productivity WHICH DECISIONS AND BEHAVIORS ARE TAKING PLACE. of the economy. Not only can they incorporate behavioral insights in The norms, narratives, and identities that societies set for their curriculum, they can also use them to improve enrollment and ensure quality. different groups may limit the opportunities that people think are available to them. The shared beliefs that groups hold FINANCIAL INSTITUTIONS PLAY AN IMPORTANT ROLE IN about certain practices or life paths may shape what people LINKING YOUNG PEOPLE TO THE BENEFITS OF THE ECONOMY. regard as acceptable job choices. This is particularly true for Financial institutions provide access to credit and services, such as savings young women, narrowing their opportunities and potential. and insurance, that poor youth with portfolios of work cannot receive from employers. Yet around 2.5 billion people don’t use formal financial services. Youth are 33 percent less likely to have a savings account than adults and 44 percent less likely to save in a formal institution. 10 Behavioral Bites Solutions To Youth Unemployment 11 THE JOURNEY Enter the workforce IDENTIFYING Identify occupation BOTTLENECKS Social pressure discounting Hyperbolic Mundane work Defeatism Lack of role models Low self-worth Aspire Persevere to work in entry-level jobs Identify places to apply Low self-efficacy Failure version Informational frictions Bandwidth overload Handle rejection Cover costs for job search Inexperience with with employers search process Inexperience Risk aversion Travel costs Build your resume Sell yourself to employers Inability to signal qualities Lack of cultural capital 12 Behavioral Bites Solutions To Youth Unemployment 13 01. SHIFT SOCIAL NORMS BY students were asked to complete IDEAS BUCKET: ENLISTING TREND-SETTERS writing assignments about values Deviating from social norms and important to them, such as EVIDENCE FROM pressures is hard when friends are relationships with their family or their socializing. One way to tackle this is competence in art. Two years later, THE FIELD to identify trend-setters – people who their GPAs were 0.41 points higher can lead the charge in changing a social and their rate of remediation or grade norm. In a program to reduce bullying repetition was 70 percent lower than This section contains examples that in the United States, popular students those who did not participate. In the have worked in different contexts were enlisted to tackle harassment. UK, BIT worked with job seekers at in addressing potential behavioral They wrote and read aloud essays about employment centers on expressive bottlenecks. While not all of them harassment, performed skits, and sold writing and self-affirmation exercises. are from the areas of labor markets wristbands to discourage bullying. Those who engaged in the exercises and youth, they tackle similar When their behavior changed, (along with other nudges) were 15 behavioral issues faced by youth in their peers’ did too. Six months after to 20 percent more likely to be off their job search journey and so they the intervention, teachers were benefits 13 weeks after signing on. are aimed to help you jumpstart 33 percent more likely to nominate (Cohenand others, 2009; Behavioural students with ties to social referents their goals would affect the lives your own behavioral solutions Insights Team, 2015) as defenders of other students from of the people around them, their exploration in your own context. harassment, and 88 percent less likely academic performance improved by to nominate students with ties to social almost half a grade point. Similarly, in referents as contributors to negative the United Kingdom, the Behavioural 04. EXPOSE YOUNG PEOPLE school environment. (Paluck and Insights Team (BIT) ran a goal-setting TO ROLE MODELS Shepherd, 2010) and planning intervention with job Without role models, young people seekers, they found an approximately often struggle to imagine themselves five percentage point increase in rate in particular roles. One way to tackle of people leaving benefits. (Morisano this is to expose young people to 02. DISCOURAGE HYPERBOLIC and others, 2010; Behavioural the experience of successful people DISCOUNTING BY HELPING YOUNG Insights Team, 2015) from a similar background. In Uganda, PEOPLE SET CONCRETE GOALS women were exposed to short videos Leisure activities give immediate of inspiring women telling their gratification, while entry-level work success story. This had a positive pays off in the long term. One way to 03. HELP AFFIRM SELF-WORTH effect on women’s entrepreneurship tackle this is to work with youths on The stigma of unemployment can spoil initiative and income from enterprises goal-setting exercises to make the people’s self-worth and self-belief and crops. Also, it increased the pathways to achieving their aspirations at the beginning of the job search informal savings, suggesting positive more concrete. In Canada, when low- process. One way to tackle this is to long term effects. (Newman and performing students were asked to encourage them to engage in self- others, in progress) write about their aspirations, values, affirmation exercises. In the United role models, and how achieving States, low-achieving African American 14 Behavioral Bites Solutions To Youth Unemployment 15 Peru, job seekers were sent text salient incentive (US$8.50) to messages about job opportunities in the temporarily migrate during the lean public and private sector. Compared season, over a fifth of households sent with job seekers in the traditional a seasonal migrant, increasing their program who received information consumption significantly. Households about public sector jobs in person, are eight to ten percentage points they were 17 percent more likely to more likely to re-migrate between one have found work by the first month. and three years after the incentive (Dammert, Galdo, and Galdo, 2015) is removed. (Bryan, Chowdhury, and 05. AVOID BANDWIDTH Mobarak, 2015) OVERLOAD BY MAKING JOB SEARCH SIMPLER The complex task of identifying the 07. ALLEVIATE FINANCIAL right job opportunities can overload CONSTRAINTS 09. ENCOURAGE INDIVIDUALS people’s mental bandwidth. One way to If individuals lack disposable funds to TO SEEK REFERENCES TO tackle this is to identify frictions in the search for work, it will be difficult to SIGNAL THEIR QUALITY and use reference letters, their job search process and simplify those search far for work. In Ethiopia, young Employers often want to verify the employment rates doubled, fully procedures to make it less mentally people were given transport subsidies skills individuals claim to have and closing the gender gap in jobs after taxing to apply for work. When low- to support their job search efforts. cannot do that without references. three months, while the reference income parents in the United States Their likelihood of finding permanent One way to tackle this is to have former letters had no effect on men. who were receiving support filing their employment increased by six percentage employers write reference letters, an (Abel, Burger, and Piraino, 2017) federal taxes were asked if they would points in the short run. Reducing small uncommon practice in developing like to spend an additional 10 minutes cash constraints by helping job seekers countries. In South Africa, when female to use the tax information they had just with a way to cover these costs might job seekers were encouraged to obtain finished providing to apply for financial diminish the risks of unemployment and 10. BUILD CULTURAL CAPITAL aid for their children to attend college, allow them to search more intensively, THROUGH COACHING the attendance rate of their children while also mitigating the need to take up Job seekers often lack key information rose by almost 24 percent. (Bettinger undesirable forms of temporary work. about how to be successful or fail and others 2012) (Franklin, Forthcoming) to act on the information that they have. In the United States, a student coaching service provided coaching to non-traditional college students. 06. PROVIDE TIMELY, 08. HELP YOUNG PEOPLE Coaches worked with students to RELEVANT INFORMATION EXPERIMENT WITH MIGRATION help them clarify their aspirations, Without timely information about Migration is risky, and many unemployed connect their daily activities to long- available opportunities, job searches youth are so close to subsistence that term plans, and to build skills, such as are costly and time-consuming. One failed migration is too costly. One way time management and self-advocacy. low-cost way to tackle this problem is to overcome this is salient and tangible Coached students were 14 percent to use text messages to provide up-to- micro-incentives. When households in more likely to persist in school after date information on job vacancies. In Bangladesh were given a small but 24 months and four percentage points 16 Behavioral Bites Solutions To Youth Unemployment 17 more likely to complete their degree a growth-mindset, their rate of within four years of receiving the satisfactory completion in core treatment. (Bettinger, ‎2011) courses increased by 6.4 percentage points. (Paunesku and others, 2015) 11. IMPROVE PRESENTATION SKILLS BY CREATING 15. MAKE WORK MEANINGFUL OPPORTUNITIES TO PRACTICE Entry-level jobs involve low-level, It may be necessary to gain experience routine tasks, and obeying commands, interacting with employers to learn how which young people may find to persuade them to offer a job. One demeaning. This can be tackled by way to solve this is to create low-stakes paying attention to how young people ways for young people to connect with regard themselves when deciding firms. In the rural Philippines, when indi- whether to apply for work. When a viduals attended a job fair for domestic business process outsourcing company and overseas work, they were more in India changed its onboarding process likely to search for work domestically personality test. Eight months later, working hard, children in the village to emphasize new team members’ “best and overseas. Although the job fair did individuals invited to the workshop were 15 percent more likely to be in selves,” they performed five percent not lead directly to employment, partici- were almost 40 percent more likely school and had a 10 percent increase better and were 34 percent more pants were almost 11 percentage points to have permanent employment and in savings. (Bernard and others, 2014) likely to stay than those who had been more likely to report formal sector 25 percent more likely to be in formal in trainings focused on organizational employment and over nine percentage employment as compared with the identity. (Cable, Gino, and Staats, 2013) points more likely to have found work control group. (Abebe and others, 2017) outside the region in the months 14. MITIGATE FAILURE BY following the job fair. (Beam, 2016) PROMOTING MINDSET GROWTH Job seekers may believe that inevitable 16. PROMOTE PERSEVERANCE BY 13. INCULCATE SELF-EFFICACY failures in the job search process MAKING GOOD WORK THE NORM If young people believe they are are signals that they should not be To stay motivated and persevere in 12. INCREASE APPLICATION incapable of gaining employment, searching in the first place. Individuals challenging work environments, young COMPETENCYY BY WALKING search failures will quickly lead to hold core beliefs about the malleability people must be gritty. In Turkey, when PEOPLE THROUGH JOB quitting. One way to tackle this is to of their abilities that frame their students were given activities high- SEARCH PROCESS help them develop self-efficacy by understanding of the world and affect lighting the plasticity of the human The process of designing a resume exposing them to narratives of success. their performance. Such implicit brain, the importance of effort, goal can be daunting to people with lower When rural villagers in Ethiopia theories can be changed, however – setting, and the constructive inter- levels of formal education. In Ethiopia, were shown an hour of inspirational from one in which their abilities are pretation of failures, they scored 0.28 unemployed youth were invited to a videos about individuals from their fixed to one in which their abilities are standard deviations higher on a stand- workshop to help people write CVs and region improving their socioeconomic two 45-minute videos encouraging ardized math test, and 0.13 standard cover letters, prepare themselves for positions by setting goals, making malleable. When students in the United deviations higher on a standardized job interviews, and take a standardized careful choices, persevering, and States at risk of dropping out watched Turkish test. (Mas and Moretti, 2009) 18 Behavioral Bites Solutions To Youth Unemployment 19 MEASURING YOUR IMPACT LEARNING FROM FAILURES Interventions can affect many psychological, behavioral, and economic One outcome of deliberate experimentation is that behavioral interventions outcomes. To detect these effects, data can be collected from administrative often do not work. This should be expected. Successfully integrating records, surveys, and experimental games. Interventions should be designed experimentation into programming is a success in itself. However, to test a credible counterfactual (either through randomizations or some while failures should be embraced as an essential feature of innovative other quasi-experimental methods). The resources and goals of the trial policymaking, failing intelligently requires that trials be designed to be able should determine the outcomes that are measured. The results of the trial to understand the reason that interventions did not work. There are many should inform how the intervention is scaled up. reasons why behavioral interventions do not work in developing settings. Here are some common causes of failure: 1. The implementing organization may lack the capacity to intervene properly. • Job search activation 2. The target population may not be interested • Job search intensity INTERMEDIARY in pursuing the goal behaviors even when the • Job search efficiency intervention makes them easier to achieve. STEPS • Call back rates • Job offers 3. The behavioral supports may not be strong enough to countervail existing social and psychological pressures. 4. The behavioral supports may have only short-term effects. • Self-efficacy PSYCHO-SOCIAL • Locus of control 5. The behavioral supports may be presented in DIMENSIONS • Discouragement a way that provokes suspicion or distrust, • Future-oriented behavior especially when individuals perceive their agency to be disrespected. 6. The behavioral intervention may be presented in a way to that does not resonate with the cultural beliefs, norms, or expectations of the target group. • Employment EMPLOYMENT • Permanent Employment 7. The behavioral intervention may have second order OUTCOMES • Job satisfaction effects that produce compensating behaviors that • Income undermine the development objective. 20 Behavioral Bites Solutions To Youth Unemployment 21 CRAZY UNTESTED IDEAS While there are often tried and tested insights, many great ideas are being explored but have not yet been rigorously evaluated. This is the stage in which most behavioral policy interventions are born. Here A REVIEW OF LABOR MARKET INTERVENTIONS are some ideas that eMBeD and other behavioral teams are exploring: BY DAVID MCKENZIE FOUND THAT COMMON APPROACHES HAVE HAD ONLY VARYING DEGREE MACHINE LEARNING FOR JOB MATCHING OF SUCCESS (McKenzie 2017): Use machine learning to profile successful employees and screen for those traits in job candidates. This would reduce the cost to firms of hiring and cost toemployment centers of filtering applicants, enabling • Just one third of the vocational training programs them to re-allocate resources to service provision. rigorously studied had a significant impact on employment and the unweighted average effect TECHNOLOGY CHATBOTS FOR PSYCHOMETRIC TESTING on employment of the studies was a mere 2.3 Use chatbots to interact with applicants and generate personality percentage point increase. profiles. This can be deployed at scale to enable job seekers to signal their socio-emotional skills and suitability for jobs. • Wage subsidies appear to struggle with take-up among firms. When they have been used, they do appear to promote employment but only in the BEHAVIORAL TECHNOLOGY TO DE-BIAS EMPLOYERS  short term. Use technology to reshape the hiring process and help employers assess information more impartially. • Interventions to reduce search and matching costs have been less expensive to implement. UPSKILL YOUNG WORKERS THROUGH Rigorous studies have more consistently found FREE MOBILE-BASED COURSES positive impacts, though the magnitude of these Help young people develop basic and intermediate technology effects have been relatively small. skills for the new digital economy using massive open online educational platforms. HELPING PEOPLE TRACK THE STEPS NECESSARY TO ACHIEVE DIFFERENT CAREER PATHS Help young people figure out how to pursue the career paths they aspire for by breaking down the steps necessary to pursue a career, for example, in engineering or nursing. 22 Behavioral Bites Solutions To Youth Unemployment 23 REFERENCES Abebe, G., Caria, S., Fafchamps, M., Falco, P., Franklin, S. and BIT (Behavioural Insights Team), 2015. Update Report Quinn, S., 2016. Curse of Anonymity or Tyranny of Distance? 2013-2015. Behavioural Insights Limited. The Impacts of Job-Search Support in Urban Ethiopia  (No. w22409). National Bureau of Economic Research. Bryan, G., Chowdhury, S. and Mobarak, A.M., 2014 Underinvestment in a profitable technology: The case of seasonal Abel, M., Burger, R. and Piraino, P., 2017. The Value of Reference migration in Bangladesh. Econometrica, 82(5), pp.1671-1748. Letters-Experimental Evidence from South Africa (Vol. 10). Working Paper. Cable, Daniel M., Francesca Gino, and Bradley R. Staats. 2013. “Breaking Them In or Eliciting Their Best? Reframing Beam, E.A., 2016. Do job fairs matter? Experimental evidence Socialization around Newcomers’ Authen- tic Self-Expression.” on the impact of job-fair attendance. Journal of Development Administrative Science Quarterly 58 (1): 1–36. Economics, 120, pp.32-40. Cohen, G.L., Garcia, J., Purdie-Vaughns, V., Apfel, N. BenYishay, A. and Mobarak, A.M., 2014. Social learning and and Brzustoski, P., 2009. Recursive processes in self- communication (No. w20139). National Bureau of Economic affirmation: Intervening to close the minority achievement Research. gap. science, 324(5925), pp.400-403. Bernard, Tanguy, Stefan Dercon, Kate Orkin, and Alema- yehu McKenzie, David. 2017. “How Effective Are Active Labor Market Seyoum Taffesse. 2014. Policies in Developing Countries? A Critical Review of Recent “The Future in Mind: Aspirations and Forward-Looking Behaviour Evidence”. World Bank Policy Research Working Paper, 8011. in Rural Ethiopia.” Working Paper, Centre for the Study of African Washington DC. Economies, University of Oxford. Newman, C., Korugyendo, P., Nakakawa, F. and Narciso, G., Bettinger, E. and Baker, R., 2011. The effects of student coaching forthcoming. Inspiring women: Experimental evidence on in college: An evaluation of a randomized experiment in student sharing entrepreneurial skills in rural Uganda. mentoring (No. w16881). National Bureau of Economic Research.