Economic Transformation, Productivity and Youth

Abstract

This report collates literature which contributes to the discussion around whether youth are more likely to benefit from economic transformation in terms of employment and income. Given the emphasis put on young people’s ability to innovate and be flexible, are they well-positioned to take advantage of macroeconomic changes? In the time available for this report, no literature was found directly answering the research question posed here, but literature on youth employment, skills, and growth provide some suggestions. The direction of causality between economic growth and youth employment is not clear. Most of the literature takes the perspective that youth can drive economic growth, not that youth stand to specifically benefit from growth. A similar story is told about skills: new skills tend to drive productivity and growth, not that productivity drives a demand for new skills. This is supported by evidence particularly from East Asia, where investment in education drove economic growth. The potential of youth to develop and innovate is widely acknowledged, but this discussion is mostly taking place in blog posts and opinion pieces, without rigorous evidence to support this assumption.