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This policy analysis focuses on the school-to-work transition as providing the central context in understanding youth unemployment in Latin America.

Youth unemployment is not a transitory state to employment, rather it is a very lengthy process where youth move from unemployment, schooling, unpaid unemployment, and low-wage unskilled employment — all of which have low opportunity costs. The youth transition process, including that of youth unemployment, largely reflects that of larger labor market trends — the large informality of the labor market, the growing skills-wage gap between workers in the formal-informal sector; and falling incomes of informal workers, moving precariously toward the income poverty line.

By assessing the economic relationships between all sectors the authors argue that youth unemployment is simply a fractured reflection of larger labor market issues. Moreover, the impact of labor market policies and programs for youth is largely tied to broader labor market dynamics.

The conclusions of the paper point to eight main recommendations:

• The school-to-work transition is a “distance too far”. The lengthy school-to-work transition evokes enormous uncertainty and continuous change. Policies and programs must address all aspects of the transition, as these activities are highly interwoven in the behavior of youth
• Given the length and nature of the school-to-work transition, long-term employability and productivity of youth should be a key consideration of policy and programs, and not short-term job placement
• Priority must be given to youth with incomplete secondary education in most countries
• Greater market incentives to stay in school. Labor market policies and programs should promote skills standards attached to youth entry wages
• The informal sector is the pathway to employment for most youth in Latin America. Incentives must be promoted to encourage human capital formation in the informal sector, alongside specific standards for youth’s employment in the informal sector
• New policies through standards and training should encourage generic skills standards relevant for both formal and informal sectors
• Large-scale programs do not fit the needs of rural youth, low-income, the youngest participants, the least educated, and often women participants. New designs and innovations are needed in targeting these specific groups, incorporating local labor market characteristics
• Research, policy dialogue and pilot projects should be encouraged between labor market projects and education reform programs

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