Youth Bulges and Youth Unemployment

David Lam, University of Michigan
Murray Leibbrandt, University of Cape Town

The transition from age structures dominated by children to age structures concentrated in working ages may have mixed economic consequences. The “demographic dividend” may contribute to economic growth. But the path to the demographic dividend must pass through the “youth bulge,” with increases in the proportion of younger workers potentially increasing youth unemployment. We analyze the economics and demography of the youth bulge using data for 154 countries. We show that the simple relationship between youth bulges and youth unemployment across countries and within countries over time is very weak. Estimating regressions including year fixed effects and country fixed effects, however, we estimate a positive relationship between the growth rate of the working-age population and youth unemployment. This suggests that the youth bulge may affect youth unemployment, with the growth rate of the youth population being more important than the youth share of the working-age population.