the resulting job creation that was observed came from firms making informal jobs formal. Although the increase in formal jobs boosted tax revenues, there was little net job creation. Similarly, in Colombia, a reduction in payroll taxes for the lowest‐paid workers (those earning up to 10 times the minimum wage) increased the formalization of jobs, and it increased the probability that workers would have a formal job, especially in small firms (Kugler et al., 2017). The authors did not look for an effect on total employment. In Sri Lanka and Jordan, wage subsidies were completely ineffective. When the subsidy stopped, the employees were let go. Although general employment subsidies may deserve more attention in low‐income countries (perhaps as part of a time‐limited incentive package for large firms), youth‐targeted wage subsidies do not, as the risk of displacement is very high.

_Workfare_ (public works employment, usually in rural areas) has not been evaluated very often because the effects seem obvious: people have jobs for a few months. There could be displacement here as well, however. Two studies checked for this effect. In India, a small amount of displacement was found, while in Malawi no displacement was found (Goldberg, 2016). Some have hypothesized that public employment is a good way to teach youth “employability” skills, but this notion has not yet been tested in an impact evaluation.

**Summing up.** If the main constraints to an expansion of wage employment are on the demand (business climate) side, employment projects could try to release these constraints, but in many countries it is difficult to know which constraints are binding and how to release them. Problems such as regulation, management skill deficits, missing infrastructure services, and thin financial markets are easy to identify but harder to address effectively (and evaluate the results) in a project setting. The results from BDS projects are promising, but these projects tend to be complex and expensive. An added consideration is that evaluations of BDS projects have not identified the minimum conditions for such an investment to pay off. In situations of conflict, weak governance, or macroeconomic instability—all of which may also result from resource dependence—the demand‐side interventions discussed here may struggle to be successful.

# 3.3 What do we know about programs to help youth enter self‐employment?

Helping youth find a sustainable livelihood in the household sector—a livelihood which at the minimum earns enough income to keep youth out of poverty—may be _the_ key employment challenge in Africa, especially among low‐income countries. The household sector includes both household farms and firms (mostly self‐employment), and over the next decade at least, it is likely to provide the majority of new employment in Africa. Analysis of data from Sub‐Saharan Africa indicates that youth work in this sector almost as soon as they leave school, but it takes some time for them to be independent of their family (Filmer and Fox, 2014).

Limited evidence suggests that many youth enter the household enterprise sector through apprenticeships (Filmer and Fox, 2014), especially youth with lower levels of education. Most apprenticeships are informal, consisting of private arrangements between the owner of an established business and the apprentice, without any government supervision and without certification (Filmer and Fox, 2014). A small survey of 350 informal enterprises in Dar es Salaam found that more than half of the operators had apprentices, on average about two per firm (Nell and Shapiro, 1999).

Informal apprenticeships suffer from two issues. First, once apprentices have mastered their trade, they still need capital to start their business. If their family cannot help, they may end up working at apprenticeship wages for longer. Second, strong gender segregation prevails within the HE/informal business sector, with males working in carpentry, metal working, construction, mechanics, and so on while females concentrate in sewing/tailoring and hair dressing. Apprenticeships perpetuate this segregation to the detriment of women, who earn less in female‐dominated fields, especially sewing 19