A youth wage subsidy experiment for South Africa

South Africa has a youth unemployment problem. This report by James Levinsohn, Neil Rankin, Gareth Roberts and Volker Schöer summarises a randomised controlled trial that investigated whether providing a wage subsidy voucher to young people, which firms that employed them could claim, resulted in higher employment. The voucher was a temporary measure that reduced the cost of hiring for firms. One year later, young people with the voucher were seven percentage points more likely to be in wage employment than those without the voucher. This impact persisted even after the vouchers lapsed. Most of those who entered wage employment as a result of the voucher were able to remain in employment. The findings highlight the potential positive effects of policies that get young people into jobs earlier.