Assessing the Economic Returns to Investing in Youth in Developing Countries
2003
Knowles, James C. | Behrman, Jere R.
This paper explores the economic case for investments in youth in developing countries. The current cohort of youth is the largest cohort ever. The economic, social, and demographic context of their lives has undergone enormous change, thus requiring a rethinking and re-evaluation of the range of investments in youth. This reappraisal must incorporate a number of critical features including recognition of the wide range of youth investments, the considerable lag in effects, and the likelihood that youth investments in one area affect investments and behavior in other areas. The paper examines forty-one investments in the following broad categories: formal schooling; civilian and military training, work; reproductive health; school-based health; other health; and community and other. The paper develops a life-cycle approach using cost-benefit analysis to calculate the economic returns to investments in youth. However, the information necessary to apply the methodology is sufficient for only a few investments in a few countries. Moreover, even for these cases, the estimated economic returns vary widely depending on the assumptions used. Despite these limitations, the available evidence suggests that some types of investments in youth, e.g., investments in formal schooling, adult basic education and literacy, some types of school-based health investments (e.g., micronutrient supplements and, under certain circumstances, reproductive health programs), and measures designed to reduce the consumption of tobacco (e.g., increases in the tobacco tax), yield economic returns that are at least as high as are those for many investments in other sectors. The lack of reliable information on the effects of many investments in youth is the most important information gap and the area meriting the highest priority for future research.
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