– not adjusted for inflation – is similar to that of a similar program, _Jovenesen Accion,_ in Colombia which cost US$750 per person in 2005.

We calculated the monetary benefits of the program based on the ATT estimate of its impact on monthly earnings for interns who completed the full program (see Table 10).These estimates show a KES 6,768 gain for males (although this is statistically insignificant) and a gain of KES 9,623 for females (however, a zero impact on female earnings cannot be ruled out). This implies that it would take about 14 months to offset the costs of the program in the case of males and only 10 months in the case of females. A new wave of data collection would be needed to confirm whether the program’s impact on paid employment is persisting and, if not, how long it lasted. Assuming that these monetary gains are sustained over time for more than a year (or 14 months), which is not an unrealistic assumption, we can conclude that the benefits of the program exceeded the costs for both males and females, resulting in a positive internal rate of return.

The 12 weeks of classroom‐based training provided by the program did not represent a positive opportunity cost and were not factored in as the estimated loss in tenure due to the program was never significant. However, it has to be noted that the gains do not take into account the non‐ monetary benefits of having a job in a private firm and that the direct costs of delivering the program do not include any possible displacement effects in the Nairobi and Mombasa labor markets on non‐participants. The impact evaluation survey and program administrative data did not make it possible to measure general equilibrium effects to quantify whether the program firms did not hire as many workers as they would have done if they had not had the services of the program interns for free.<sup>19</sup> If the program interns crowded out non‐participants from jobs, then we have underestimated the costs. However, as the size of the KYEP pilot (about 730 graduates in Nairobi and 300 in Mombasa in cycle 2) was negligible compared to the share of the youth population of working age in both cities, it seems reasonable to assume that these displacement effects may be of second‐order. However, the concern about displacement effects may be more important if the program is scaled up to the point of being large relative to the labor market.

# **IX. Conclusions**

The KYEP training and internship program that is being piloted in Nairobi and Mombasa provides three months of classroom‐based technical training coupled with three‐month internships in private firms to vulnerable youths between the ages of 17 and 29 years old, defined as those who were out of school and/or had no permanent job in the previous year. These are considered to be youths at risk of having only low‐productivity jobs and of depreciating their skills at an early stage of their lifecycle. A minimum of eight years of education is one of the eligibility conditions for the program to ensure that participants have the basic skills and capacity to absorb the technical and life skills taught during the program.

The demand‐driven design of the program is very similar to the approach taken in other programs that have been implemented and evaluated in developing countries in Latin America. For instance, the core business, sector‐specific, and life skills taught to the KYEP interns were those in demand by employers. As such the KYEP pilot represented an opportunity to evaluate the effectiveness of

> 19 To measure displacement effects would require comparing employment outcomes in the cities, districts, and sectors where the program was not implemented with cities, districts, and sectors where the program was implemented and between participant and non-participants.

24