S P D I S C U S S I O N PA P E R

NO. 0606

Youth in the Labor Market and the Transition from School to Work in Tanzania
Florence Kondylis and Marco Manacorda

July 2006

Youth in the Labor Market and the Transition from School to Work in Tanzania

Florence Kondylis & Marco Manacorda

July 2006

Youth in the Labor Market and the Transition from School to Work in Tanzania1 Florence Kondylis* and Marco Manacorda**

1.

Introduction

Tanzania, together with many other Sub-Saharan countries (see Guarcello and others 2005), suffers from a severe youth unemployment and inactivity problem in urban areas (Mjema 1997). Despite sustained growth in the second half of the last decade, during the 1990s labor market outcomes have further deteriorated (Government of Tanzania 2003). Although unemployment is by no means a problem unique to youths in Sub-Saharan Africa, the problem there is compounded by disappointing education outcomes that make the prospects of youths appear rather dim and by the circumstance that work is often the only asset for a large part of the population while no publicly provided insurance mechanism against the risk of unemployment is in place. Despite unemployment being largely an urban phenomenon in Tanzania, labor market outcomes of rural youths are not much rosier. Although rural children transition at very early ages into work (with no or little schooling or sometimes in combination with school) (see for example Beegle and Burke 2004; Beegle and others 2004.most end up in low productivity jobs on the household farm. This is a possibly a major reason behind increasing migration from the countryside to urban areas (U.S. Census Bureau 1995), even in the face of poor and deteriorating urban labor market prospects. Urbanization reflects wider demographic trends: between 1957 and 2002 population grew fourfold, and this trend is not expected to end any

We are grateful to Jean Fares, Marito Garcia, and seminar participants at the workshop on Youth in Africa's Labor Market, Washington, D.C., for many helpful comments and suggestions. All remaining errors are ours. Corresponding author: Marco Manacorda: Centre For Economic Performance, London School of Economics, Houghton Street, WC2A 2AE London, United Kingdom. Email: m.manacorda@lse.ac.uk. *Department of Economics, RHUL and CEP- London School of Economics, UK **Department of Economics, QMUL and CEP London School of Economics, UK

time soon,2 casting serious doubts on the possibility that the youth joblessness problem will disappear in the meantime. Although we are not the first to document the level of youth joblessness in Tanzania (Mjema 1997; Government of Tanzania 2003; LO/FTF 2003), our paper aims to shed some additional light on this phenomenon. First, we provide evidence on different dimensions of youths' labor market performance. For this exercise we can rely on micro data from the Tanzanian Integrated Labor Force Survey (ILFS) of 2000/01, a rather large household survey (approximately 11,000 households) that provides a rich array of information on employment, job search, schooling, training, and migration, together with basic information on individuals' and their households' characteristics. Second we attempt to uncover the determinants of youths' labor market outcomes and to tease out significant predictors of labor market success and failure using simple regression tools. The structure of the paper is as follows. Section 1 presents an overview of the youth unemployment problem. Section 2 presents the data. Section 3 presents detailed descriptive statistics on youths' labor market performance. Section 4 presents the regression results. Section 5 concludes. 2. Youth in the labor market By now an extensive literature analyzes youths' labor market outcomes and their transition into adulthood in Organisation for Economic Co-operation and Development (OECD) countries and especially the United States (for all, see OECD 1996, 1998, 1999, 2000 and Ryan 2001). As discussed in Rees (1986), youths typically display lower labor market attachment and lower employment rates than older workers. Some of them are still engaged in full time education or combine education with work; others devote time to job searching or move from one job to another as part of their investment in human capital or as a process of mutual information gathering with employers. From this perspective youth joblessness reflects (a potentially efficient) mechanism of allocating workers to jobs. Lack of dependents and the possibility of relying on parental support often make joblessness a less painful alternative for young workers and less of a problem from the perspective of the social

See http://www.tanzania.go.tz/ppu/demografic_situation.html.

planner. Lower wages associated with lower experience levels or stronger preferences for leisure also potentially imply lower disutility of being out of employment for young workers. Not only do youths display higher rates of joblessness and unemployment than adults due to frictional reasons at any given point in time, but they also appear to be more sensitive to the state of the economic cycle. The youth unemployment problem in most developed countries (and in particular in OECD countries following the oil shocks of the 1970s) is largely attributed to the weakness of the economy and overall lack of labor demand (Rees 1986; Freeman and Wise 1982; Blanchflower and Freeman 2000a, 2000b; ILO 2000; Card and Lemieux 2000). Disadvantaged youths in particular appear to bear a disproportionate share of the cost of economic downturns or weak labor demand in their area of residence (Freeman 1991; Freeman and Rodgers 1999). Reasons for the extreme vulnerability of youths in the labor market to economic downturns have largely to do with their lower level of labor market skills (experience and sometimes education) and lower labor market attachment (including lower job search), employment protection legislation, and hiring and firing rules that often penalize recently hired workers. If aggregate demand matters, aggregate supply does too. At given labor demand, a rise in the proportion of youths in the labor market seems to disproportionately affect the youths themselves, consistent with a world where youths and adults are only imperfect substitutes in production. Excess supply relative to demand affects wages, employment, or both (Welch 1979; Card and Lemieux 2001; Koreman and Neumark 2000). As young workers see their employment prospects deteriorate, not only do they tend to work less, but they respond with adjustment at different margins, including a higher probability of staying in school, residing with parents (Card and Lemieux 2000), or even committing crime (Freeman 1996, 1999). Much less is known about the behavior of youths in developing countries. Rozenzweig (1988) and O'Higgins (2003) both show that higher unemployment and joblessness rates among youths are widespread in many developing countries. Work by Guarcello and others (2005) also document very high inactivity rates among youths in 13 Sub-Saharan African countries. Other researchers present similar pictures from other parts of the world (for example, Rama 2003 for Sri Lanka).

A commonly held view about urban labor markets of developing countries is that (youth) joblessness is a luxury accessible only to those from more advantaged backgrounds, often proxied by their education. Unemployment is often regarded as an option pursued by youths queuing for a job in the public sector or waiting to fill a vacancy in the formal private sector. In the presence of widespread poverty and in the absence of public provision of welfare nonemployment is just a nonviable option for the poor, who will have no other option but making ends meet through informal and causal work. From this perspective the youth unemployment problem should not per se be a source of major policy concern since this is by enlarge a voluntary phenomenon, In the rest of this paper we document youths' labor market outcomes in Tanzania and we explicitly attempt to document what roleif anymarket forces play in shaping these outcomes and how individuals respond to changing economic incentives. We argue in particular that youth joblessness is by no means a voluntary phenomenon in Tanzania. In the last part of the paper we summarize these findings with an eye to the potential role of the policymaker. 3. Data In this section we present basic descriptive evidence on school attendance and labor market performance of teenagers and youths in Tanzania. For the purpose of this exercise we use micro data from the 2000/01 ILFS. The ILFS is a rather large sample survey (43,558 individual observations in 11,158 households) collecting a rich array of information on several features of individuals' work activity, schooling and (off the) job-search together with information on a number of individual and household characteristics. In the rest we present evidence on individuals aged 1519 (teenagers) and 2024 (youths) relative to individuals aged 3549 (prime-age individuals). We present separate results for men and women and for the main geographical areas of the country: Dar Es Salaam, other urban areas, and rural areas. We refer sometimes to Dar Es Salaam plus other urban areas as urban areas. Dar Es Salaam, other urban areas, and rural areas account for 15%, 17%, and 69% respectively of the observations in the sample and for 7%, 16%, and 77% of the weighted sample. Teenagers and youths account for a slightly higher share of the population in urban areas, accounting for 8% of the weighted sample in Dar Es Salaam, 17%

in other urban areas, and 75% in rural areas, possibly suggesting an increasing trend toward rural-urban migration. For men we have 1,008, 996, and 3,971 observations in Dar Es Salaam, other urban areas, and rural areas respectively. For women these figures are 1,162, 1,221, and 3,982. Because we rely on a single (albeit very rich) cross section of data, in order to uncover the determinants of youths' labor market outcomes we exploit differences between different groups of workers within Tanzania (differences between young and old workers or across groups of young workers with different observable characteristics such as region of residence, gender, or age). While this strategy has the advantage of generating sufficient variation in the data to credibly identify the impact of the variables of interests, this also implies that we remain largely agnostic on the macro-determinants (that is, those common to everybody in the labor market) of the state of the labor market in Tanzania. 4. Descriptive evidence We start by presenting data on individuals' labor force status and school attendance. We move on to examine the characteristics of those working and then concentrate on those out of work. Labor force status and schooling choices Tables 1A reports basic labor supply indicators for men. In all tables the data are weighted by sampling weights. Column 1 reports information on the proportion of individuals in school. The data illustrate that school attendance is on the order of 58% for male teenagers in Dar Es Salaam and tends to fall as one moves to other urban areas and then to rural areas, where school attendance is on the order of 39%. A similar pattern can be identified for male youths, with around 14% of them in school in Dar Es Salaam and only 2% in rural areas. Among individuals out of school, some drop out at an earlier age while others never attend. Column 2 reports information on those who never attended school. School attendance at one point in an individual's life is almost universal in Dar Es Salaam (on the order of 97% for men. A similar picture emerges in other urban areas where the proportion of males who never attended school is on the order of 4% irrespective of age. School attendance though is far from universal in rural areas: 15% of male teenagers and youths have never

attended school. This proportion rises to 19% for prime-age men, suggesting an improvement in education outcomes across subsequent cohorts of men. Table 1A: Labor Force Status and Schooling MALES
Age Group Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age (1) School (2) Never attended (3) Work (4) Work & School (5) No work & no school

0.581 0.142 0.000 0.508 0.078 0.000 0.391 0.023 0.000

0.026 0.042 0.021 0.040 0.038 0.042 0.146 0.154 0.192

0.206 0.472 0.974 0.435 0.760 0.949 0.761 0.922 0.968

0.036 0.020 0.000 0.122 0.016 0.000 0.219 0.009 0.000

0.249 0.407 0.026 0.178 0.177 0.051 0.067 0.065 0.032

Patterns of work participation in column 3 are, to a large extent and in all areas, the mirror image of patterns of school attendance. Work here refers to any work activity in the week prior to the survey. The data include people with a job but temporarily absent from it. While around 20% of male teenagers are working in urban areas, the corresponding proportion is 43% in other urban areas and 76% in rural areas. Similar patterns can be identified for youths, with an employment-to-population ratio that increases from 47% in Dar Es Salaam to 76% in other urban areas. By contrast, the majority of male youths living in rural areas work, with an employment-to-population ratio of 92%. Teenager and youth participation rates are always below prime-age men's, which is on the order of 9597% with little variation across areas. Column 4 reports the proportion of young men combining work and school. One can clearly see that part-time work and school is essentially a phenomenon affecting teenagers in all areas. In other urban areas there is a small proportion of individuals doing both activities (less than 4%), but this proportion rises to 22% in rural areas. This is probably due to the

circumstance that rural teenagers are able to provide their work services on the household farm, without the need for a lengthy job search or formal contractual arrangements. In addition, lower household income in these areas makes these individuals potentially more likely to work even while still in school, while the lack of substantial alternative work opportunities other than on the household farm makes the return to search quite low. Column 5 analyses the proportion of individuals who are neither at work nor at school (sometimes defined as jobless; see Ryan 2001).3 This column provides a first illustration of the problems that young individuals face in Tanzanias labor market. Around 25% of teenagers and 40% of youths are neither at school nor at work in Dar Es Salaam. The corresponding proportions in other urban areas are 18% for both teenagers and youths. In rural areas, joblessness is lower and on the order of 7% for both age groups. Table 1B: Labor Force Status and Schooling FEMALES
Age Group Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age (1) School (2) Never attended (3) Work (4) Work & School 0.027 0.009 0.000 0.089 0.000 0.000 0.169 0.007 0.000 (5) No work & no school 0.319 0.580 0.307 0.276 0.304 0.108 0.065 0.071 0.049

0.442 0.054 0.000 0.368 0.025 0.000 0.343 0.012 0.000

0.036 0.043 0.120 0.061 0.050 0.157 0.186 0.213 0.474

0.265 0.374 0.693 0.445 0.672 0.892 0.762 0.924 0.951

Note: The table reports the proportion of teenagers (aged 1519), youths (aged 2024), and prime-age individuals (aged 3549) who report being enrolled in school (column 1), never having attended school (column 2), in work (column 3), combining work and school (column 4) and neither in work nor in school (column 5) in Dar Es Salaam, other urban areas, and rural areas. All data are weighted by sampling weights. Source: IFLS 2000/01 micro data.

One can check that the sum of those in work (column 1), plus those in school (column 3), plus those neither in school nor in work (column 4) minus those combining work with school (column 5) adds up to one.

Looking at women's labor force status (table 1B), notable differences between genders emerge. Women are less likely to be in school relative to men of the same age. This is particularly evident in urban areas: in Dar Es Salaam the proportions of female teenagers and youths in school are 44% and 5% respectively (that is, 14 percentage points and 9 percentage points respectively less than boys of the same age). In other urban areas, the proportions of female teenagers and youths in school are 37% and 2% respectively (12 percentage points and 5 percentage points respectively less than boys of the same age). In rural areas, where boys' school attendance is lower, differences between girls and boys are less evident, with a proportion of female teenagers in school of 34% and a proportion of female youths in school of 1% (that is, 5 percentage points and 1 percentage point respectively less than boys of similar age). Column 2 investigates whether these differences are due to girls being less likely to enroll in school in the first places. The proportion of teenage and young girls who never attended school is around 4% in Dar Es Salaam and between 5% and 6% in other urban areas, hence exhibiting little difference with respect to boys. This suggests that girls are on average less likely to remain in school that boys are. The proportion of teenage and young girls who never attended school is much higher in rural areas: 19% and 21% respectively, or between 4 percentage points and 5 percentage points more than men. Although girls appear to do worse than boys in terms of school attendance, a comparison with older individuals shows that recent cohorts of women have experienced a remarkable progress relative to men in both rural and urban areas. The proportion of prime-age women who never attended school is 12% in urban areas (10 percentage points more than men), 16% in other urban areas (12 percentage points more than men), and 47% in rural areas (27 percentage points more than men) As with men, female employment ratios increase with age in all areas, and they are at their lowest in Dar Es Salaam and at their highest in rural areas. As illustrated in column 3, the proportion of female teenagers at work is 27% in Dar Es Salaam, 45% in other urban areas, and 76% in rural areas. The corresponding proportions among female youths are 37%, 67%, and 92%. In general, teenage girls are more likely to be working than teenage boys: this differences range from 6 percentage points in Dar Es Salaam to 1

percentage point in other urban areas. Differences are statistically significant.4 No differences emerge in rural areas. The pattern is reversed among youths, as young girls are less likely to be in work than young boys. Here differences range from 10 percentage points lower in Dar Es Salaam to 9 percentage points lower in other urban areas. Again, no differences emerge between girls and boys in rural areas. One potential explanation for this pattern is that girls in urban areas drop out of school earlier than boys and enter the labor market earlier. However, as they age, some of them tend to withdraw from the labor market, as they get gradually absorbed by childrearing and other domestic activities, while potentially a smaller proportion of school leavers enter the labor market. This is confirmed by an analysis of employment to population ratios among prime-age women that shows a negative female-male gap. The differences in the employment-topopulation ratios between prime-age women and men are 28 percentage points lower in Dar Es Salaam and 5 percentage points lower in other urban areas. Differences in rural areas are on the order of only 1 percentage point. Column 4 shows that girls are also less likely than boys to combine work and education. This is a largely a reflection of the fact that fewer women are in school full time. If one standardizes the proportion of those combining work and school (in column 4) to the proportion in school (in column 1), results are very similar for men and women, so that, conditional on being in school, the probability of work is similar for boys and girls. Finally, column 5 reports the proportion of women neither at school nor at work. As one could have expected from the data presented in the previous columns in urban areas, girls are more likely to be jobless than boys. This likely partly reflects lower labor supply of women together with potentially lower demand for their work services. As with men, it appears that young girls aged 2024 (youths) are at greater risk of being neither in school nor in work. For example, the proportion of jobless women rises from 32% for teenagers in Dar Es Salaam to 58% for youths and falls to 30% for prime-age women. The corresponding proportions in other urban areas are 28%, 30%, and 10%. There are no

One can easily check that with around 1,000 observations (N), the standard deviation of a proportion (p) is at most 0.015 (this is the square root of (p)(1-p)/N for p=0.5, that is, at its maximum). This suggests that most of the differences between boys and girls in this and the remaining tables are statistically significant since they are outside the other gender group confidence interval.

discernible differences in the prevalence of joblessness between boys ands girls in rural areas. In sum, there is evidence that a non-negligible proportion of the population drops out of school and starts to work at a rather early age, especially in rural areas. In general, girls drop out earlier and enter the labor market sooner than boys. However, as an increasing proportion of individuals drops out of school, the chances of finding a job tend to fall in urban areas. Whereas, most men eventually appear to get absorbed into the labor market, a large proportion of women remains out of the labor market; especially in Dar Es Salaam, possibly devoting their time to home production. In rural areas the data suggest a smoother transition, with a large proportion of individuals transitioning into work at early ages. This is true for both men and women. It is important, however, to emphasize that this smoother transition in rural areas might be the result of individuals being required to work at early ages in order to guarantee their household's and their own survival, together with lower returns to education and job search. Rural jobs are likely to provide only subsistence for many individuals. In this sense, such quicker transitions are possibly associated with worse lifetime outcomes for individuals in rural areas than for those in urban areas. Employment In this section we concentrate on the characteristics of those in employment. Tables 2A and 2B report the distribution of work by occupation, together with some information on hours of work and underemployment. Columns 1 to 5 report the proportion in work split into five categories: those in paid employment (employees), self-employed (split between those with and without employees), those performing unpaid work in the family nonagricultural business (typically shops), and those working on their own farm. Work for pay includes payment both in cash and in kind. The data refer to the individual's main occupation in the week prior to the survey. Boys are in general more likely to perform work on the household farm or business and less likely to be in paid employment or to run their own business than are prime-age men. For example, among teenagers the proportion of employees is 41%, 15%, and 4% in Dar Es Salaam, other urban areas, and rural areas respectively. For

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prime-age men these proportions are 55%, 37%, and 9%. Similarly, the proportion working in the family business (columns 4 and 5 together) in the three areas is 33%, 68%, and 94% for teenagers and 5%, 29%, and 86% for prime age men. Self-employment (columns 2 and 3 together) interests respectively 27%, 17%, and 2% of teenagers and 40%, 34%, and 5% of prime-age men. One possible interpretation of these figures is that paid employment might require a lengthy job search, and access to self-employment might require either capital or access to credit, with both these conditions being probably harder to fulfill for younger individuals.5 Column 6 presents data on total hours of work in all jobs. In general workers in urban areas tend to work more hours. Prime-age men work on average 58 hours a week in Dar Es Salaam and 62 hours in other urban areas. In rural areas average hours of work are lower, on the order of 54 hours. Both teens and youths tend to work less then prime-age men, but patterns across areas largely reflect those of prime-age men's. Average number of hours of work among teenagers is on the order of 53, 44, and 43 respectively in Dar Es Salaam, other urban areas, and rural areas respectively. For youths, these numbers are 58, 58, and 52 respectively.6 Data on hours of work include all jobs held by individuals. A non-negligible proportion of individuals in Tanzania hold at least two jobs. Column 7 reports this proportion. Multiple job holding is particularly widespread in other urban areas and in rural areas and is more common among prime-age men than among teenagers and youths. For example only 2% of youth in employment have a second job in Dar Es Salaam compared with around 8% of prime-age men. In rural areas these figures are 18% and

In addition a compositional effect is likely to be at work. This is because, as the labor force ages, an increasing proportion of it is composed by individuals with higher education. These trends potentially reflect the circumstance that more educated individuals are more likely to enter into paid employment or to start their own business (especially with employees) than less educated individuals. Regression results (not reported) show that conditional on education the probability of being an employee does not grow with age. However, for selfemployment with employees there is still a pronounced age growth, even conditioned on education. This suggests that compositional effects are important in explaining the growth in dependent employment over the life cycle but not the growth in self employment with employees. 6 Because some teenagers tend to combine work and school, one might think that a more appropriate comparison is between young and prime-age individuals out of school. Effectively, when one restricts to this sample, the data (not reported in the table) show that teenagers tend to work less than older workers in both rural and other urban areas, but more than older workers in Dar Es Salaam.

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24%. Overall it appears that young individuals work fewer hours than prime-age men and are less likely to hold more than one job. One might wonder whether these differences in hours worked across different age groups reflect differences in the supply or the demand for labor. In what consists of an admittedly imperfect measure of the imbalance between the demand and the supply of hours of work across age groups, we report an indicator of underemployment in column 8. This measures the proportion of individuals who work fewer than 40 hours a week and declare a desire to work more hours.7 It is interesting to observe that this proportion is always the highest among young individuals. For instance, in Dar Es Salaam 7% of teenagers and 4% of youths declare being underemployed. For prime-age men this proportion is only 1%. In rural areas the corresponding proportions are respectively of 5%, 6%, and 3%.

Unfortunately, the questionnaire does not ask whether this refers to a desire of working more hours at the same wage.

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Table 2A: Job Characteristics MALES

(1) Age Group Employee (2) Self-employed with employees (3) Occupation Self-employed, no employees (4) Unpaid family worker 22.75 6.65 0.00 (5) Own farm (6) Usual hours (7) Multiple jobs (8) Underemployed

Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age

40.76 47.38 54.46

0.00 1.72 10.32

27.20 38.36 30.00

9.29 5.88 5.22

53.061 58.077 57.808

0.003 0.021 0.078

0.066 0.042 0.010

15.05 21.77 36.94

0.21 3.06 5.54

16.74 22.49 28.48

5.24 3.82 0.38

62.76 48.87 28.66

44.137 58.180 62.288

0.160 0.104 0.211

0.028 0.037 0.021

3.63 5.62 8.95

0.04 0.34 0.99

2.32 4.63 4.44

3.47 0.83 0.25

90.54 88.57 85.37

43.116 52.876 54.701

0.125 0.183 0.240

0.048 0.057 0.033

Note: The table reports the characteristics of those in work. Columns 15 report the occupation held (employee, self-employed with employees, selfemployed with no employees, unpaid family worker, and working on own farm). Column 6 reports usual hours of work among those reporting positive hours. Column 7 reports the proportion holding more than one job. Column 8 reports the proportion working less than 40 hours a week and wishing to work more hours. See also notes to table 1A.

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Table 2B: Job Characteristics FEMALES

(1) Age Group Employee (2) Selfemployed with employees 0.42 2.77 3.27 (3) Occupation Self-employed, no employees (4) Unpaid family worker (5) Own farm (6) Usual hours (7) Multiple jobs (8) Underemployed

Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age

52.06 36.38 27.22

26.12 53.82 55.79

15.24 4.37 0.39

6.16 2.66 13.34

56.324 54.724 50.425

0.036 0.025 0.070

0.071 0.136 0.104

16.77 19.08 14.12

1.27 1.08 5.85

11.72 35.18 28.40

20.86 6.51 2.88

49.39 38.14 48.77

43.443 48.976 52.829

0.187 0.150 0.263

0.122 0.078 0.095

1.86 1.32 2.29

0.00 0.28 0.19

1.91 1.94 3.03

5.16 1.38 0.78

91.06 95.08 93.70

41.728 46.943 48.642

0.136 0.149 0.199

0.080 0.109 0.082

Note: See notes to table 2A.

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Table 2B reports the employment characteristics of women. Teenage girls appear to be more likely to work as employees than teenage boys in urban areas (52% and 17% in Dar Es Salaam and other urban areas respectively, versus 41% and 15% for boys) and less likely to work in the family enterprise. Changes in the distribution of women's employment over the life cycle appear rather different from men's. As with men, the proportion in nonagricultural self-employment rises with age in each area (from 27% to 59% in Dar Es Salaam, from 13% to 36% in other urban areas, and from 2% to 3% in rural areas), and the proportion engaged in unpaid nonagricultural family work falls (from 15% to less than 1% in Dar Es Salaam, from 21% to 3% in other urban areas, and from 5% to 1% in rural areas). However, in contrast to men, the proportion in salaried employment falls (from 52% to 37% in Dar Es Salaam and from 17% to 14% in other urban areas) or stays constant (at 2% in rural areas), while engagement in the household farm rises. In urban areas, prime-age working women are less likely to be in paid employment or to be self-employed with employees than men are and more likely to be self-employed with no employees or to work in the family enterprise than prime-age men are. In rural areas most working women tend to engage in work on the household farm. These women account for 94% of working women in rural areas (compared with 85% of working men). These patterns might reflect different opportunities in the access to salaried employment for women compared with men, possibly due to their lower labor market characteristics (for example, education) or as a result of gender discrimination. The need to take care of their children and families might also make salaried dependent employment a less attractive opportunity for women in Tanzania. Information on hours shows that on average women tend to work fewer hours than men. Differences in average hours of work between prime-age women vary between minus 8 in urban areas to minus 5 in rural areas. The same does not apply for teenage girls: the average differences in hours of work among teenage girls and boys range from a positive value of 3 in Dar Es Salaam to a negative value of 1 elsewhere. This is consistent with the notion that women tend to engage increasingly in household chores, although an alternative explanation may be that women who start to work at very early ages are those with the higher marginal utility of consumption relative to leisure, that is, those from poorer backgrounds or whose leisure parents value less, hence those who provide more hours in the market.

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Underemployment is larger for females than for males. For example, 14% of female youth in Dar Es Salaam declare being underemployed compared with only 4% of men. In sum, the career profiles of men and women appear rather different. As they become older, urban men tend increasingly to move away from work in the household enterprise or farm toward salaried employment and self-employment. At the same time these individuals tend to work more hours. This is a combination of true job changes, together with the fact that those who leave school later tend to be more likely to engage in salaried and self-employment and to work more hours (plus possibly differences across cohorts). A large majority of working men in rural areas are engaged in work in the household farm, although movements toward salaried employment and self-employment that are qualitatively similar to those in urban areas are observed here. As they grow older, women in urban areas increasingly work either as self-employed with no employees or in the family farm. In part, this might reflect a movement away from salaried employment due to the need for more flexible working arrangements in order to attend to domestic duties. In rural areas, women's participation is higher at any age, and there is little indication that rural women withdraw from the labor market. Almost all these women work on the household farm. Women tend to work fewer hours than men, but they are also more likely to declare being underemployed. In this sense, lower labor market attachment on the part of women does not seem to be completely ascribable to their lower labor supply. There is evidence that women in Tanzania find it particularly hard to access the labor market in urban areas, probably because of a combination of discrimination and lower market skills. Inactivity and unemployment So far we have concentrated on the characteristics of those in work. Tables 3A and 3B report instead of information on the characteristics of those out of work and school. We have already documented the levels of joblessness (that is, those out of both work and school) in tables 1A and 1B. The first column of table 3A reports the proportion of active men, according to the International Labour Organization (ILO) definition. This includes those working plus the strictly unemployed, which includes individuals who are out of work but are willing to take a job if offered one and who have taken some steps in the last week to look for work. Not surprising, activity rates increase with age and are lowest in Dar Es

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Salaam and highest in rural areas among teenagers and youths, paralleling patterns of employment. Activity rates among teenagers increase from 39% in Dar Es Salaam to 77% in rural areas. Participation rates for youths vary between 79% in Dar Es Salaam and 93% in rural areas. For prime-age men, participation is almost universal, with the proportion of inactive individuals varying between 1% in Dar Es Salaam to 3% in rural and other urban areas. Unemployment ratesthe measure generally used to ascertain joblessness in developed countriesare reported in column 2. These are obtained as the ratio between the number of (strictly) unemployed individuals and the number of active individuals, according to the ILO definition. Unemployment rates are remarkably high among teenagers and youth in urban areas. There is virtually no unemployment in rural areas. For teenagers these rates range from 47% in Dar Es Salaam to 13% in other urban areas. Similar patterns emerge among youths: unemployment rates are on the order of 40% in Dar Es Salaam and 11% in other urban areas. Interestingly, unemployment rates are virtually zero among prime-age men. Male unemployment in Tanzania is hence primarily an urban phenomenon disproportionately affecting young workers.

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Table 3A: Unemployment and Inactivity MALES

(1) Active (ILO) Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age (2) Unemployment rate (ILO) (3) Unemploymentto-population ratio (4) Available & no search (5) Not available (6) Long-term unemployment (7) Very longterm unemployment (8) Unemploy ment duration

0.386 0.790 0.989

0.465 0.403 0.015

0.179 0.318 0.015

0.027 0.020 0.004

0.054 0.073 0.007

0.487 0.798 0.599

0.265 0.488 0.499

3.596 9.131 3.392

0.498 0.850 0.965

0.126 0.106 0.017

0.063 0.090 0.016

0.035 0.016 0.005

0.082 0.077 0.030

0.701 0.737 0.493

0.525 0.646 0.367

5.025 5.660 1.974

0.773 0.936 0.974

0.016 0.015 0.007

0.012 0.014 0.007

0.025 0.019 0.007

0.037 0.032 0.018

0.245 0.265 0.334

0.208 0.156 0.237

1.776 1.730 1.677

Note: The table reports the characteristics of those out of work. Columns 1 reports the proportion active (in work or strictly unemployed). Column 2 reports the proportion strictly unemployed conditional on being in the labor force. Column 3 reports the proportion unemployed as a percentage of the population in that age group. Column 4 reports the proportion of those available to accept a job if offered one but not looking for work (as a proportion of the population). Column 5 reports the proportion unavailable to take a job if offered one (as a proportion of the population). Columns 6 and 7 report the proportion in long-term unemployment (one year or more) or very long-term unemployment (two years or more). Column 8 provides an estimate of in unemployment duration. See text for details. See also notes to table 1A.

18

Table 3B: Unemployment and Inactivity FEMALES

(1) Active (ILO) Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age (2) Unemployment rate (ILO) (3) Unemployment -to-population ratio 0.201 0.305 0.085 (4) Available & no search 0.061 0.091 0.056 (5) Not available (6) Long-term unemployment (7) Very long-term unemployment (8) Unemploy ment duration 4.715 5.894 2.805

0.466 0.679 0.778

0.431 0.449 0.109

0.070 0.185 0.166

0.599 0.619 0.498

0.373 0.432 0.445

0.472 0.750 0.906

0.057 0.104 0.015

0.027 0.078 0.014

0.118 0.083 0.041

0.138 0.143 0.053

0.663 0.784 0.838

0.563 0.634 0.616

3.514 5.430 9.271

0.767 0.935 0.954

0.007 0.012 0.004

0.005 0.011 0.003

0.031 0.021 0.007

0.038 0.039 0.039

0.266 0.310 0.224

0.222 0.190 0.189

1.634 1.579 1.427

Note: See notes to table 3A.

19

One might wonder whether these data provide a good indication of the extent of joblessness among different age groups. To the extent that fewer youths are active (recall that active individuals do not include those in school), one might suspect that this mechanically inflates the prevalence of unemployment among this group. In particular, if those out of school are those with a lower probability of finding a job, these figures overestimate the extent of unemployment for a random individual in that age group. By contrast, if those who have no job opportunities stay in school or declare themselves inactive, this leads to the opposite bias. An alternative measure of joblessness relates the number of unemployed to the entire population, abstracting from whether these individuals are in school or not (or even active or not). The unemployment-to-population ratio is reported in column 3. Interestingly, even if one standardized unemployment to a much larger population at risk (that is, the entire population in that age group), unemployment prevalence is still higher among youths and teenagers. Figures for prime-age individuals are virtually identical to the ones in column 2, given that, as shown in column 1, essentially all prime-age men participate in the labor market. Although we have so far concentrated on unemployment, it is important to realize that not all of those out of work (or school) are strictly unemployed. Columns 4 and 5 report the proportion of individuals who are available to take a job if offered one and have not looked for work in the week preceding the survey and those who self-declare unavailable respectively. These are groups with increasingly lower labor market attachment. The last group includes truly idle individuals. The proportion of available individuals who declare not having searched over the previous week is rather small at all ages and in all areas. This labor market status is most prevalent among teenagers and on the order of 3% of the population in all areas. Figures on inactivity show, rather worryingly, that 5% of teenagers and 7% of youths in Dar Es Salaam are idle. The proportions in other urban areas are 8% and 7% respectively. In rural areas 4% of teenagers and 3% of youths are inactive. These figures make the extent of joblessness even more worrying among teenagers and perhaps suggest that unemployment ratios might understate the extent of the problem.

20

The figures above show that urban teenagers and youths are at very high risk of being unemployed. However these data are unable to tell us whether these individuals circle in and out of unemployment or whether they get stuck in unemployment for long periods of time. Columns 5 and 6 report the proportion of long-term unemployed among those available to take a job (whether searching or not). Column 5 reports the proportion of those with at least one year of job search. Column 6 shows the proportion of those with at least two years of job search. These are sometimes labeled very long-term unemployed. In urban areas, where unemployment is more likely to occur, long-term unemployed accounts for about 50% or more of the overall unemployment pool. What is remarkable is that long-term unemployment is particularly widespread among youths. This is a major difference with respect to European countries in the 1990s, where long-term unemployment is thought to have been a problem largely for older individuals (Machin and Manning 1999). More than 70% of unemployed youths in urban areas are long-term unemployed. This contrasts with a proportion of longterm unemployed on the order of 3750% for prime-age men. In rural areas, where unemployment is almost nonexistent, the data show that the few who declare being unemployed transition quite rapidly through this state. The proportion of long-term unemployment varies between 16% and 24% depending on age among rural men. Column 7 reports the average duration of unemployment as estimated from data on inflows and unemployment prevalence.8 Average unemployment duration is remarkably high in urban areas, especially for youths, consistent with the observation that these individuals have a disproportionate risk of being long-term unemployed. Average duration in Dar Es Salaam varies between 3.6 years for teenagers and 9.1 years for youths. In other urban areas these figures are respectively 5 and 5.7. Notice that unemployment duration is also higher in Dar Es Salaam for prime-age men (3.4 years compared with 2 years in other urban areas) but still much lower than for teenagers and youths.
Notice that cross-sectional dataincluding thesetypically report information on unemployment duration for the unemployed only. Hence the duration of unemployment spells is right-censored. The simple average of these durations will tend to underestimateand potentially by a large amountactual unemployment duration. To derive duration here we use the following identity that holds in steady state u=i/(i+h), where u is the unemployment rate, i is the inflow rate, and h is the outflow rate (Machin and Manning 1999). In steady state average duration equals the reciprocal of the outflow rate (that is, 1/h). To obtain these figures, we have computed unemployment rates as the proportion of individuals available (that is, strict and nonstrict unemployed) over the population in work or school or available. We compute inflow rates as the number of individuals with at most three months of unemployment standardized to the sum of those in work and school.
8

21

The question naturally arises as to why so many young individuals are inactive or not looking for a job. In table 4A we report the subjective reasons provided by these individuals for not looking or for not being available tout court. As columns 1 to 6 show, a large proportion of individuals answers that they are not looking for a job due to the poor expectation of finding one. This proportion is particularly high for teenagers and youths in urban areas. For example, in Dar Es Salaam 66% of individuals report this as the main reason for not looking. This compares with 21% among youths (and zero among prime-age men). A relevant share of those not looking reports to be waiting for a reply to a job application or waiting for a job to start. No systematic patterns can be detected through areas or age groups. Only in urban areas is there a large proportion of inactive youths and teenagers (around 30%) declaring not to be looking due to their involvement in home duties. Columns 79 report the reasons provided by those not available. Between 20% and 30% of these inactive teenagers report being involved in household chores. The relative importance of this explanation falls as individuals age. Rather interestingly, between 11% and 46% of teenagers, depending on the area, report being inactive due to sickness or disability. This accounts for an even greater proportion of inactive youths. These worrisome figures are most likely the result of the HIV/AIDS epidemic. Although there is no way to ascertain this with the data at hand, evidence from other sources suggests that youths are at the highest risk of contracting HIV/AIDS in Tanzania, one of the countries with the highest prevalence in Sub- Saharan Africa.9 The residual category other accounts for a large share of the inactive. Overall it appears that inactivity hides some productive employment in the household, leading to an overestimate of the true extent of joblessness among young individuals. It is unclear, though, whether the category other includes individuals who have stopped being available due to poor labor market prospects.

Recent estimates indicate HIV prevalence of 8.8% among the population aged 1449 (UNDP 2005), above the average of Sub-Saharan Africa (7.3%). Infection rates for young adults in the age groups 2024, 2529, and 30 34 range from 5.9% to 7.9% among males, and from 9.3% to 10.1% among females, who are affected at earlier ages than males (Tanzania Commission for AIDS, www.tanzania.go.tz/ hiv_aids.html#Prevalence%20of%20HIV%20Infection).

22

Table 4A: Reasons for not Looking or Inactivity MALES

(1) (2) (3) Reason not look Offseason (4) (5) (6) (7) (8) Reason not available Sick (9)

Thought would not find Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age

Waiting for job or reply

Household duties

Temporarily ill

Other

Household duties

Other

64.48 25.55 0.00

13.58 32.48 100.00

0.00 0.00 0.00

3.16 2.68 0.00

3.60 0.00 0.00

15.18 39.30 0.00

28.03 18.71 0.00

11.26 24.71 100.00

60.71 56.57 0.00

28.28 51.83 16.20

48.83 21.84 7.01

0.00 0.00 38.32

7.53 18.02 0.00

1.48 0.00 0.00

13.88 8.31 38.47

25.83 16.85 12.56

31.66 15.74 83.41

42.51 67.41 4.03

17.43 19.92 33.80

22.11 27.88 39.35

8.25 8.68 17.72

30.70 37.59 9.13

1.32 0.00 0.00

20.18 5.93 0.00

22.67 10.49 3.17

45.91 58.62 92.11

31.42 30.89 4.73

Note: The table reports the characteristics of those out of work who report not looking for a job (columns 16) or those unavailable to take a job if offered one (columns 79). In each column the table reports the distribution of the main self-reported reason for not looking or being unavailable. See also notes to table 1A.

23

For women, several interesting patterns emerge. As column 1 of Table 3B shows, activity rates are higher among teenage women than teenage men in Dar Es Salaam: here the activity rate for women is 47% (8 percentage points higher than for men). In rural areas there is no substantial difference between teenage boys and girls, with a teenage female activity rate on the order of 77% (the same as men's). In other urban areas girls are slightly less likely to be active than men (47% compared with an activity rate for teenager men of 50%). Although, womens activity rates increase with age, the rise is less pronounced than for men, and hence men overtake women by the time they reach prime age. Participation rates for prime-age women are on the order of 95% in rural areas (2 percentage points less than men) and 78% in Dar Es Salaam (20 percentage points less than men). Although activity rates are lower for women than for men, a higher or equal proportion of active women are unemployed at least in Dar Es Salaam, as shown in column 2. In Dar Es Salaam unemployment rates are 43% for female teenagers (3 percentage points less than men), 45% for female youths (5 percentage points more than men), and 11% among prime-age women (10 percentage points more than men). In other urban areas women are less likely to be unemployed than men when in their teens (6% compared with 13%), but women are equally likely to be unemployed when they are in between the ages of 20 and 24 (10% compared with 11%). As with men, there is no unemployment in rural areas. Urban unemployment hence is a similar problem for young males and females. In addition, prime-age women are also at high risk of unemployment, at least in Dar Es Salaam. An analysis of columns 4 and 5 shows that a much higher proportion of women than men are available but not looking or unavailable. For example, in Dar Es Salaam the proportion of female youths available but not searching is 9% (compared with 2% for men), and the proportion of idle youths is 18% (compared with 7% for men). Idleness rates rise from teenagers to youth and then stay constant (at around 17%) in urban areas. By contrast, this rate increases and then decreases in other urban areas. Most likely, women here re-enter the labor market as they are relieved from major childrearing responsibilities. Idleness is low and stable in rural areas. When one moves to analyzing long-term unemployment and unemployment duration, it turns out that young women display generally shorter durations than young men. This is

24

true for all age groups in all areas except teenagers in Dar Es Salaam. Average duration among female youths in Dar Es Salaam is 5.9 years (compared with 9.1 years for men) and in other urban areas this is 5.4 years (compared with 5.2 years for men). Obviously because a non-negligible proportion of women enter into inactivity, an option largely unavailable to men, this might explain why observed durations are shorter for women than for men. Table 4B illustrates that more than half of female teenagers and youths in Dar Es Salaam not looking for a job declare being discouraged, that is, do not to expect to find one. A smaller proportion of women than men declare waiting for a response from a potential employer or for a job to start. As expected, women are more likely than men to report not looking due to family reasons. More women than men report not looking due to the offseason in rural areas. This perhaps reflects the more cyclical nature of jobs for women than for men in the agricultural sector. Not surprisingly a higher proportion of idle women reports being involved in household duties as the main reason for not being available. This proportion tends to increase with age in urban areas, consistently with the notion that inactive women effectively are engaged in productive work at home.

25

Table 4B: Reasons for not Looking or Inactivity FEMALES (1) (2) (3) Reason not look Offseason (4) (5) (6) (7) (8) Reason not available Sick (9)

Thought would not find

Dar es Salaam Teens Youth Primeage Urban Teens Youth Primeage Rural Teens Youth Primeage

Waiting for job or reply

Household duties

Temporarily ill

Other

Household duties

Other

59.98 67.49 42.85

8.50 2.72 19.90

0.00 0.00 16.65

12.47 24.56 17.02

1.00 0.00 0.00

18.05 5.23 3.58

43.03 73.14 77.75

17.62 15.12 20.14

39.35 11.74 2.11

16.67 15.37 36.49

28.89 17.94 20.49

1.65 3.48 10.26

48.00 47.06 29.08

0.00 1.78 0.00

4.80 14.37 3.68

40.47 45.83 46.36

18.12 27.62 46.87

41.41 26.56 6.77

17.15 22.39 47.23

18.31 5.15 25.34

20.80 18.50 14.32

28.63 46.57 0.00

0.00 0.00 8.13

15.11| 7.39 4.99

21.42 24.31 12.77

54.89 57.10 85.83

23.69 18.58 1.40

Note: See notes to table 4A.

26

Tables 5A and 5B analyze the job search activities among the (strictly) unemployed. Formal inquires with potential employers are the most widespread search method. However, as individuals age, they are less likely to use informal search channels (asking friends or relatives) than to ask directly employers or to attempt to start their own business. For example, the proportion of unemployed teenagers asking family and friends is 19% in Dar Es Salaam, 29% in other urban areas, and 36% in rural areas. Conversely, the proportions of those attempting to start their own business are 6%, 3%, and 28% respectively. Among prime-age men only 9% use family and friends as their favorite job search channel in Dar Es Salaam, 0% in other urban areas, and 6% in rural areas. The proportion of prime-age men attempting to start their own business is 37% in Dar Es Salaam, 11% in other urban areas, and 30% in rural areas. Overall these data show the difficulties that youths face in looking for a job. They hardly attempt to start their own business, which, as already mentioned, requires access to capital, and hence is a less viable opportunity. Young individuals are more likely to use informal channels, perhaps due to their lower chances of finding jobs through formal job applications with employers. No substantial differences emerge in the pattern of job search between men and women. Table 5A: Job Search Methods MALES (1) Enquiry with employer
Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age 75.31 58.37 64.26

(2) Family and friends

18.96 30.76 8.91

(3) Attempt to start own business

5.73 10.87 26.83

67.79 79.25 89.46

28.56 12.93 0.00

2.19 7.82 10.54

39.69 51.06 64.55

25.89 20.15 5.89

28.11 24.83 29.56

Note: The table provides information on the most important search method among the unemployed. See also notes to table 1A.

27

Table 5B: Job Search Methods FEMALES (1) Enquiry with employer
Dar es Salaam Teens Youth Prime-age Urban Teens Youth Prime-age Rural Teens Youth Prime-age 55.16 53.55 36.46

(2) Family and friends

38.40 29.21 19.44

(3) Attempt to start own business

5.23 17.24 41.21

63.13 59.14 56.90

21.85 17.44 11.95

15.03 20.27 31.15

44.33 67.73 69.07

0.00 0.00 0.00

55.67 27.58 30.93

Note: See notes to tables 5A.

In sum, we have illustrated that urban unemployment is primarily a youth phenomenon in Tanzania (and to a lower extent a problem for prime-age women in Dar Es Salaam). Unemployment figures are likely to underestimate the extent of joblessness since a (small) proportion of individuals declare being available but not looking due to the expectation of not finding a job. ILO inactivity rates are also remarkably high. Some of these individuals are engaged in household chores, so they are somewhat involved in productive activities. Some may be discouraged and have abandoned their search activity. We also find that a non-negligible proportion of individuals declare being inactive due to health reasons. This accounts for as much as 4% of men and 2% of women aged 2025 in Dar Es Salaam. Although there is no way to check this in the data, it is plausible that this remarkably high inactivity rates are to be ascribed to the widespread prevalence of HIV/AIDS. Women seem to fare even worse than men. Although dropping out of the labor force seems an option for a non-negligible proportion of women in urban areas, possibly itself the result of lower labor demand, joblessness remains higher for women even conditional on participation.

28

One further piece of evidence that emerges from the analysis is that long-term unemployment is particularly widespread, especially among youths. Rather than cycling in and out of the labor market in an attempt to gain employment for life, youths in urban Tanzania remain out of the labor force for very long periods of time. Girls tend to display lower than average unemployment durations than boys but this is most likely a reflection of the fact that some of them transit to inactivity, an option rarely pursued by men. Prime-age women also appear to suffer from remarkably high rates of unemployment and underemployment, at least in Dar Es Salaam. Participation is also lower for women than for men in urban areas. Although this might signal that their productivity at home is higher than the wage they are offered in the market (or that they have stronger preferences for home production relative to market activities), an additional (and not mutually exclusive) explanation is that low participation is the result of low labor market prospects. In rural areas unemployment and underemployment are not major problems at all ages and across both sexes. Both participation and employment are remarkably high. Obviously this says very little about the quality of jobs these individuals hold and their own standards of living. 5. Determinants of Youths' Labor Force Status In this section we investigate further teenagers' and youths' labor force status and schooling choices using simple regression tools. In particular, we concentrate on the role of aggregate indicators of the state of the local labor market, and conditional on this we attempt to tease out what individual characteristics predict employment, unemployment and school attendance among Tanzanian youths. For different labor market outcomes Y, we run the following regressions (1) YiR = 0 + XR'1 + Xi'2 + uiR

where i denotes a generic individual living in region R. The XR's are regional characteristics, the Xi's are individual characteristics, and u is an error term. One might expect that a major factor explaining the poor labor market fortunes of teenagers and youths in Tanzania is lack of job opportunities. If wages are far from perfectly flexible, low labor demand will increase joblessness. As discusses in section 1, youths might be at particular risk of being excluded from the labor market. In order to measure the level of

29

local labor demand we use the prime-age employment-to-population ratio in the individuals' region of residence. We use employment of prime age individuals because this is presumably the group with highest labor market attachment and whose employment is most likely to be exogenous to that of youths. After some experimentation with the data we decided to include the employment-to-population ratio of individuals aged 3544. Second, at given local labor demand (that is, adult employment), a rise in the supply of young workers is likely to have an effect on their employment prospects. Hence we include in the model the share of teenagers and youths over total working age population (1560) in each region. Because rural-to-urban migration is high in Tanzania (accounting for about 28% of the population of teenagers and youths in urban areas), in order to compute the share of youths and teenagers in the population in urban areas we are restricted only to those who declare being born in that area. This allows us to control for the potential bias that would stem in our regressions due to endogenous migration. If migration is stronger toward cities where labor demand is also stronger (see Card 2001), including the share of young residents (rather than natives) would overestimate the (presumably negative) correlation between youths' labor supply and their employment rate.10 We include average travel time (in hours) to the closest secondary school as an additional measure of local opportunities. These data come from the Household Budget Survey of 2000/01, which provides information on the distance to a large number of types of infrastructure, including secondary school, for each household in the sample. We have aggregated the data by region and rural/urban status and included this variable on the right side of the regressions. We also include a number of individual controls. First, we include a dummy variable denoting whether the individual received any type of training in his life. This includes both on-the-job training, such as apprenticeship, and off-the-job training, such as formal vocational education. Second, to measure returns to migration we include a dummy variable for whether the individual is a migrant. Because we want to investigate the role of

10

In principle, one would want to re-impute those who migrated to urban areas back to their rural area of origin to measure local labor supply net of migration (exactly as done in urban areas, where migrants have been excluded). Unfortunately, there is no way with the Integrated Labor Force Survey data to know where migrants to cities come originally from (except, generically, whether they are from an urban or rural part of the country).

30

individuals' family background in determining their labor market outcomes, we also include the average years of education of all other household members. Because each individual household members education is correlated with his or her age and sex, we also completely condition for the age and sex structure of the individual's household by including the number of males and females in each five-year age cell in the household (coefficients not reported). Additionally, all the regressions control for the following covariates. First, we include four education dummy variables: never attended school (0 years of education), incomplete basic (16 years of completed education), completed basic (7 years of completed education), and at least one year of secondary education (8 years of education or more). To control for the circumstance that participation rises and school attendance falls as individuals get older and that this in turn might depend on the level of education we include unrestricted dummy variables for potential experience (age-education-7). To control for different household structure we include dummy variables for the individual's relationship to the household head (head, spouse, child, other relative, domestic employee, or unrelated family member). We also include quarter-of-year dummy variables to allow for potential seasonal patterns in employment. Finally, to control for potentially unobserved differences between the capital city and other urban areas we include a dummy variable for residence in Dar Es Salaam.11 Standard errors (in brackets) are clustered by region of residence. Before presenting the regression results, some care must be exerted in interpreting the regression coefficients. Although one would ideally want to include only exogenous variables on the right hand side for the ordinary least squares estimates to carry a causal interpretation, one might be skeptical that this is the case in our regressions. For example, if individuals with otherwise better labor market prospects are more likely to acquire education and receive training, this would lead to the erroneous conclusions that training boosts employment. Similar concerns arise with the variables reflecting the age and education structure of the household or the child's relationship to the household head, since living arrangements might themselves be endogenous to latent labor market outcomes. Along the
11

This implies that we do not exploit differences between Dar Es Salaam and other urban areas to identify the effect of aggregate indicators. These coefficients are completely identified based on differences across other urban areas. Observations from Dar Es Salaam, though, contribute to the identification of the effect of all other individual variables in the model.

31

same lines one has to be extremely cautious in interpreting the coefficient on the migrant dummy variable as the causal effect of migration. Those who migrate are most likely those with larger potential gains from or lower costs of migration (see, for example, Borjas 1999), implying that one cannot extrapolate results based on their performance to the population of potential migrants at large. With these limitations in mind we now move on to discuss the regression results. Tables 6A and 6B present regressions for males and females aged 1524 respectively. The top part of each table refers to the urban population while the bottom one refers to the rural population. Each column refers to a separate dependent variable. We report the probability of being in work (whether or not in combination with school) in column 1, the probability of school (whether in combination with work or not) in column 2, the probability of combining work and school in column 3, the probability of only working in column 4, the probability of being a full-time student in column 5, and the probability of being jobless (that is, neither working not attending school) in column 6.

32

Table 6A: Determinants of Teenagers' and Youths' Labor Force Status and Schooling Choices MALES
(1) Work (2) School (3) School & work (4) Work only (5) School only (6) No work & no school -0.586** (0.277) 0.154 (0.176) -0.116 (0.091) 0.044 (0.028) 0.077 (0.046) -0.025*** (0.003) 2004 0.163

Adult employment rate Share youth Time to school Training Migrant Head of household education Observations R-squared

1.075** (0.378) -0.480** (0.213) 0.055 (0.112) 0.137*** (0.024) -0.034 (0.038) 0.001 (0.007) 2004 0.331

0.092 (0.186) 0.004 (0.118) 0.111 (0.081) -0.185*** (0.023) -0.052* (0.026) 0.020*** (0.004) 2004 0.517

URBAN 0.581** 0.494** (0.228) -0.322*** (0.110) 0.050 (0.067) -0.004 (0.013) -0.009 (0.015) -0.004 (0.005) 2004 0.241 (0.218) -0.159 (0.138) 0.005 (0.079) 0.141*** (0.025) -0.024 (0.034) 0.006 (0.004) 2004 0.381

-0.489* (0.268) 0.326** (0.135) 0.061 (0.087) -0.181*** (0.022) -0.043* (0.022) 0.024*** (0.007) 2004 0.427

33

Table 6A: (contd.) Determinants of Teenagers' and Youths' Labor Force Status and Schooling Choices MALES
(1) Work (2) School (3) School & work RURAL 0.544 (0.390) 0.199 (0.337) -0.025** (0.012) -0.040** (0.015) 0.016 (0.020) 0.002 (0.004) 3971 0.247 (4) Work only (5) School only (6) No work & no school -0.360* (0.181) -0.142 (0.114) 0.024 (0.019) 0.022 (0.027) 0.031 (0.031) 0.007* (0.004) 3971 0.059

Adult employment rate Share youth Time to school Training Migrant Head of household education Observations R-squared

0.762 (0.465) 0.275 (0.334) -0.044 (0.026) 0.032 (0.023) -0.007 (0.037) -0.016*** (0.002) 3971 0.150

0.141 (0.182) 0.066 (0.140) -0.004 (0.007) -0.094*** (0.024) -0.009 (0.013) 0.010** (0.004) 3971 0.464

0.218 (0.221) 0.076 (0.164) -0.019 (0.018) 0.072*** (0.024) -0.023 (0.028) -0.017*** (0.004) 3971 0.380

-0.402 (0.440) -0.133 (0.300) 0.021 (0.014) -0.054*** (0.014) -0.025 (0.017) 0.009** (0.003) 3971 0.197

Note: The table reports the coefficient of a regression of each of the dependent variables (in the top row) on the following variables: prime-age (aged 3544) local employment population ratio by sex, share of individuals aged 1524 in the population aged 1560 (restricted to resident individuals who were born in that area), average travel time to secondary school (in hours), a dummy variable for whether the individual received training, a dummy variable for migrant status, and average years of education of other household members. Additional controls (coefficient not reported) include dummy variables for level of education (0 years of education, 16 years of education, 7 years of education, and more than 7 years of education), dummy variables for potential experience (age-education-7), dummy variables for relationship to the household head (head, spouse, child, other relative, domestic employee, and unrelated family member), a dummy variable for residence in Dar Es Salaam, quarter of year dummy variables, and number of other household members in each five-year age cell, separately by sex. All regressions refer to individuals aged 1524. Method of estimation is generalized least squares with weights given by sampling weights. Numbers in parentheses are standard errors, clustered by region of residence. *** Significant at the 1% level. ** Significant at the 5% level. * Significant at the 10% level.

34

Table 6B: Determinants of Teenagers' and Youths' Labor Force Status and Schooling Choices FEMALES
(1) Work (2) School (3) School & work URBAN 0.067 (0.065) -0.164 (0.136) 0.023 (0.082) -0.027** (0.010) -0.007 (0.018) -0.010 (4) Work only (5) School only (6) No work & no school -0.412** (0.152) 0.323 (0.278) -0.050 (0.193) 0.003 (0.052) -0.001 (0.034) -0.008 (0.011) 2383 0.196

Adult employment rate Share youth Time to school Training Migrant Head of household education Observations R-squared

0.410* (0.197) -0.652* (0.326) -0.002 (0.189) 0.148** (0.059) 0.031 (0.038) -0.015 (0.012) 2383 0.272

0.068 (0.097) 0.165 (0.179) 0.075 (0.098) -0.177*** (0.024) -0.036 (0.021) 0.013 (0.009) 2383 0.446

0.344* (0.181) -0.488 (0.288) -0.026 (0.163) 0.174*** (0.053) 0.038 (0.046) -0.005

0.002 (0.120) 0.329** (0.147) 0.052 (0.062) -0.150*** (0.027) -0.029 (0.022) 0.023*** (0.008) 2383 0.384

(0.007) (0.007) 2383 2383 0.161 0.311 RURAL 0.168 (0.323) -0.041 (0.165) -0.023** (0.010) -0.030 (0.022) -0.006 (0.011) -0.089 (0.301) 0.025 (0.191) 0.006 (0.014) 0.076*** (0.021) -0.004 (0.032)

Adult employment rate Share youth Time to school Training Migrant

0.079 (0.540) -0.017 (0.285) -0.017 (0.019) 0.046* (0.024) -0.010 (0.028)

0.368*** (0.123) -0.025 (0.093) -0.028*** (0.004) -0.085** (0.030) -0.009 (0.012)

0.200 (0.338) 0.016 (0.212) -0.005 (0.011) -0.055*** (0.019) -0.003 (0.006)

-0.279 (0.283) 0.001 (0.152) 0.022 (0.013) 0.009 (0.031) 0.013 (0.028)

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Among urban boys, local labor demand seems to have a pronounced effect on all these different margins of adjustment except for school attendance. The estimated coefficient in column 1 (1.07) implies that a 10 percentage point rise in adult employment leads to an approximately equal rise in youths' employment. Column 2 shows that this does not affect school attendance. However columns 3 and 4 show that a rise in local labor demand leads to a significant increase in both the probability of combining work and school (0.58) and the probability of full time work (0.49). The rise in employment following a rise in local labor demand hence comes in approximately equal proportions from a rise in part time work among students and a fall in inactivity (0.59, in column 6). If local labor demand seems to affect urban boys' labor force status, local labor supply also appears to matter. Consistent with theory, local labor supply shows systematically the opposite sign of local labor demand. The point estimates in the table show that a 10 percentage point rise in the share of youths in the working age population leads to a drop in employment of 4.8 percentage points and a rise in full-time school of 3.3 percentage points. Again an improvement in the state of the local labor market appears to have no effect on overall school attendance (column 2) but it tends to increase the share of urban boys combining work and school. An analysis of the other rows shows that distance from school infrastructures does not appear a biding constraint for urban boys. Training instead is associated with higher employment and lower schooling. Although one might infer from this that training boosts employment, as already discussed, at an alternative interpretation is that training is administered with higher probability to those in work or at least to those with higher probability of work. Migrant boys are less likely to be in school, but there is no apparent correlation with employment or inactivity. The negative effect of migration on school attendance most likely reflects the circumstance that most individuals migrate after they have left school. Higher household education increases boys' probability of school attendance and reduces joblessness. One additional year of education among all other household members is associated with a rise in school attendance of 2 percentage points and a drop in joblessness of 2.5 percentage points. This suggests that family background is an important predictor of

36

labor market outcomes in Tanzania: urban individuals from more educated households are more likely to be in school and less likely to be inactive. Results in rural areas in the bottom part of the table are qualitatively similar, although in general less precise. In general, local labor demand displays no statistically significant effect on rural boys' labor force status. As with the results on local labor demand, there is no significant effect of the youth share of labor force status. Possibly this lack of significant effects reflects the circumstance that boys in rural areas are largely employed on the household farm and hence that their employment prospects are largely independent of the state of the local labor market. An alternative explanation for the lack of significance of the labor supply variable is that emigration from rural areas occurs when labor market opportunities worsen, so that as labor supply increases youth employment falls, leading to a coefficient that is biased toward zero in the regressions. Unlike in urban areas, in rural areas distance to school appears to be an important determinant of youths' labor force status, affecting the probability of combining work and school with a negative coefficient (0.025). This is consistent with the notion that higher school distance acts as a fixed cost of school attendance, hence reducing the incentives for individuals to combine work and school. The coefficients on the other variables appear in line with the ones in urban areas. Similar to urban areas, higher household education increases school attendance, but in rural areas it is associated with a fall in employment and a slight rise in inactivity. Boys from more privileged backgrounds give up work in exchange for either school or leisure in rural areas while in urban areas they stay in school rather than remaining unemployed or inactive. The results in table 6B also illustrate significant effects of aggregate demand on labor force status and schooling decisions of girls in urban areas. Results are qualitatively similar to the ones found for boys. A noticeable difference though is that changes in local labor demand largely appear to affect the margin between inactivity and full time work for urban girls. As column 1 shows, a 10 percentage point increase in women's adult employment translates into a rise in girls' employment rate of about 4 percentage points. This is the mirror effect found on joblessness in column 6 (0.41). Unlike for boys, school in combination with work does not appear to be an important margin of adjustment for urban girls in response to

37

changes in the state of the local labor market. Aggregate labor supply also appears to be an important determinant of labor force status among girls' in urban areas. Results are similar to the ones found for boys. No appreciable difference can be detected between boys and girls insofar as the other coefficients go. For girls in rural areas results are similar to the ones found for boys. Local labor market conditions, whether on the side of demand or supply, appear to matter little. Surprisingly, stronger labor demand is associated with higher school attendance among girls. Prima facie, this result is hard to rationalize. Distance to school emerges again as an important determinant of labor force status, with increasing school distance leading to a fall in part time school and hence an overall fall in school attendance. We have performed a number of robustness checks on the data (not reported). One first concern is that because some prime-age individuals are household members of the youths whose behavior we want to study, this might lead to biased estimates of the effect of local labor demand. This bias stems from the correlation between different household members' labor supply due to reasons other than local labor demand and supply (for example, patterns of substitution or complementarity in individuals' labor force status within the household or added worker effects). To check how relevant this problem is for each young individual, we have computed prime-age employment to population rate net of the employment of prime-age individuals in his household. Results are essentially unchanged. Second we have computed adult employment using different age brackets for adults (those aged 2549 or those aged 3549). In general results are qualitatively similar although less precise. Third, we have estimated the effect of local labor demand and supply ignoring most of the other (potentially endogenous) covariates included in the models in tables 6A and 6B. This is to address the concern that the inclusion on endogenous variables might affect the consistency of the estimates of the (arguably exogenous) indicator for the state of the local labor market. Results were qualitatively unchanged although point estimates were less precise. In sum, there is evidence of Tanzania's teenage and youth labor force status being strongly affected by local labor demand, as proxied by adult employment, especially in urban

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areas. While an improvement in local labor demand translates into a rise in employment for both boys and girls, the effect is larger for boys since a non-negligible proportion of them tends to combine work with school as demand becomes stronger, while the same does not happen for girls. For both boys and girls stronger local labor demand tends to reduce joblessness, that is, to increase employment rates among those who would have otherwise been out of school. We find no evidence of local labor demand affecting school stay-on rates, potentially suggesting that widespread school dropout in Tanzania at earlier ages is not due to the need for these children to engage in work but rather the potentially high costs of or low returns to schooling (for evidence on low returns to education at least at low and intermediate levels, see Sberdom and others (2004). This matches well with the observation that school in combination with work is not uncommon and with the fact that labor market prospects are poor in urban areas. At a given level of local demand, a rise in the aggregate supply of youths to the labor market also appears to depress individuals' labor market prospects. Local labor demand and supply indicators appear to explain little of the variation in employment across rural areas. This might be due to the fact that rural boys are disproportionately employed on the household farm and hence isolated from the local labor market. Endogenous out-migration might also partly explain this lack of results. Distance to school infrastructure appears to be a constraint in rural areas only. Higher school distance tends to reduce the incentive to combine work with school, hence lowering school attendance with no significant effect on work at the extensive margin. Fourth, individuals' socioeconomic background, as proxied by the average education of other household members, is a strong predictor of young individuals' labor force status, being associated with a fall in work (in rural areas) and joblessness (in urban areas) and a rise in schooling. 6. Discussion and conclusions

Our analysis of the Tanzanian youth labor markets illustrate that the aggregate state of the local labor market is a major determinant of young individual's labor market outcomes in urban areas. By all accounts the joblessness problem is due largely to a shortage of aggregate demand relative to aggregate supply. However, the joblessness problem is paramount among teenagers and youths in urban Tanzania. Relative to prime-age individuals, youths in urban

39

areas are 45 times more likely to be jobless, compared with a youth-to-adult unemployment ratio of about 2 in most developed countries (ILO 2000). In addition, although in most (developed) countries for which data are available higher unemployment prevalence among youths is typically associated with shorter durations (Machin and Manning 1999), the opposite is true in urban Tanzania. This makes the youth unemployment problem more acute in Tanzania than in most other developed countries. Our analysis also illustrates that the youth unemployment is unlikely to reflect young individuals queuing for rationed well paying jobs. Contrary to the widespread view that in developing countries joblessness is a luxury for the better-off, we find that in Tanzania individuals from more advantaged family backgrounds tend to attend school more and are less likely to be jobless in urban areas, suggesting that joblessness is a more severe problem for the poor. Women and in particular young women appear rather penalized in this context. Girls in urban areas start working at earlier ages than boys, sometimes in menial and badly paid jobs characterized by long working hours, but their transition to the labor market during the life cycle is slower, as a substantial proportion of women gets absorbed in home production (child bearing and child rearing in particular). Although one might argue that the confinement of a large (although arguably decreasing) proportion of women in household production activities might simply be the result of preferences and cultures, we have presented evidence that a large number of women self-classify as involuntary unemployed or underemployed and that improvements in labor market conditions lead to a drop in women's inactivity rates. Both these two pieces of evidence suggests that a substantial proportion of women (and in particular young women) remains inactive due to poor labor market prospects. A separate though related question regards rural areas. Here unemployment and joblessness do not appear to be major problems, although as emphasized in the text, the apparent smooth transition between school and work and the prevalence of work since very early ages might be eased by the circumstance that young individuals largely work as unpaid family employees on the household farm, and this says very little about the quality of jobs that these individuals hold and their well-being. The sustained and increasing migration from

40

rural to urban areas, despite (and potentially causing) increasing jobless in urban areas, signals that the employment prospects of rural youths are not rosier than their urban counterparts. An analysis of the reasons why the labor market in Tanzania is unable to absorb all available workers goes beyond the scope of this paper. One can speculate, though, that the economic reforms of the mid-1990s that put the country on a path of fiscal discipline and macroeconomic stabilization and led to extensive privatization (World Bank 2005) hit disproportionately those who were attempting to enter the labor market for the first time. These trends seem not to have been so far compensated by the sustained GDP growth registered since the mid-1990s. Additionally, massive demographic changes leading to a rising proportion of youths in the labor market together with increasing urbanization have certainly further deteriorated the labor market prospects of recent cohorts of urban workers. By contrast, one can state with a certain degree of confidence that some of the reasons sometimes invoked in more developed countries for the (youth) unemployment problem such as minimum wages, union power, employment protection legislation, or the perverse incentives associated with welfare are all unlikely to apply to Tanzania (or in general to most developing countries), where the labor market is by enlarge unregulated, welfare is essentially nonexistent (if not for public sector workers), and unions extend only to the formal (public sector) (Freeman 1993; LO/FTF 2003). This evidence immediately raises the question of how young individuals cope without jobs and how policy could intervene where such mechanisms of adjustments appear inadequate. One possible explanation is that Tanzanian youths engage in some form of causal and informal work that is not recorded in the ILFS, so that our measure of unemployment and joblessness largely overestimates the nature of the problem. This point certainly merits further research. A second possibility is that young individuals engage into illegal or possibly criminal activities. Evidence from the United States quoted above shows that criminal behavior is responsive to labor market opportunities, especially among the most disadvantaged youths, that is, those with poor labor market prospects. Again this behavior does not show in the ILFS, although data from the United Nations Development Programme (UNDP 2005) based

41

on victimization rates show alarming property crime and robbery rates in Dar Es Salaam (23.1% and 8.2, compared with, say, rates of 10% and 0.6% for the United States). Similarly, prostitution might be another way for young people, especially women, to make ends meet. Obviously if crime, illegal, or hazardous activities are the response to the poor labor market prospects of youths in Tanzania, this might provide an additional rationale for policy intervention aimed at the youth unemployment problem. Finally, without social protection, households might be the ultimate provider of welfare to youths. This might come through cohabitation and shared living arrangements or even through resource pooling by members of the same household living apart. Migration of some household members from rural to urban areas might indeed be a way for rural households to spread the risk of economic downturns affecting differently cities and the countryside (Rosenzweig 1988). More rural-biased development (after decades of urban bias), and in particular land redistribution might certainly relieve some of the pressure on the urban labor market (Mjema 1997) although it is not at all obvious whether this would be able to guarantee sustained growth. In principle there are alternative ways for youths to cope with labor market shocks. Policy intervention can be potentially important (OECD 1999). One strategy is to stay in school. If the alternative to school is inactivity or unemployment, one might wonder why so many youths in Tanzania appear to drop out early in the absence of substantial work opportunities. We found no evidence that school enrollment is affected by the state of the local labor market, although we found that in urban areas boys are more likely to combine work with school in good times. In rural areas distance to school infrastructure instead remains an impediment to school attendance. Policies aimed at improving stay-on rates possibly via an improvement in school quality and school construction should potentially alleviate some of the problems in the youth labor market. Another mechanism through which youths typically react to the poor local labor market prospects is via migration. As said, rural to urban migration is certainly an important re-equilibrating mechanism in Tanzania, possibly explaining why we find no effect of aggregate demand and supply indicators on youths' labor market outcomes in rural areas. However, the simple evidence that local labor demand and supply matter in explaining

42

differences in employment across urban areas suggests that migration of workers (and capital) do not respond sufficiently to local economic incentives. Potential gains might come from increasing mobility across urban areas in turn fostered from a more effective information system about the existence of vacancies. In the face of scarce salaried employment opportunities a third strategy for those with no employment is to set up one's own business. We have shown that young individuals are substantially less likely to be self-employed than prime-age individuals are. Widespread difficulties in access to credit, a lack of entrepreneurial culture and skills, and a legal framework that has long discouraged small (informal) enterprises (Mjema 1997) are all likely to explain why this avenue is rarely pursued by Tanzanian youths. Again this seems to suggest room for policy intervention. However the strongest inefficiencies in the labor market (and elsewhere in the economy) arise from poor enforcement of property rights, lack of legal protection, and widespread corruption coupled with an overly bureaucratic government (Freeman and Lindauer 1999; LO/FTF 2003). It must be emphasized that the government of Tanzania is not indifferent to the problem of youth unemployment and that a number of policies have been implemented or proposed (by the government) and activities launched (by nongovernmental organizations and international organizations) since the mid-1980s. Since the early 2000s, government intervention in youth unemployment has experienced a new impulse. To the best of our knowledge, no formal evaluation of such policies exists, making it hard to discuss their impact and to derive policy prescriptions. However, an analysis of the polices proposed and (partly) implemented during the 1990s that aim to promote employment and growth and that involved as (possibly indirect) beneficiaries the youths leads to the conclusion that these efforts were in general ineffective (Shitundu 2005). Underinvestment and the very limited number of beneficiaries, both due largely to the small budget allocated to these policies, together with mismanagement and lack of coordination among the different agents involved or even political patronage, all hampered these policy efforts.12 13

12

Such policies include, for example, the National Youth Development Fund, the Womens Development Fund, the National Entrepreneurship Fund, and the Local Government Youth and Women Development Funds.

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Since the late 1990s and early 2000s, and in recognition of the dramatic nature of the problem, the youth employment problem has acquired a much more prominent place in the government agenda. This is reflected in a number of legislative acts or policy proposals that identify (youth) employment growth as one of the aims of government interventions,14 and a number of policy actions that have since then been launched or are being in the process of taking place (Shitundu 2005; World Bank 2005) These polices include both supply-side and demand-side interventions. From the supply side, one major policy is the Primary Education Development Programme of 2002, which abolished school fees and is apparently responsible for an unprecedented rise in primary school enrollment after more than a decade of stagnation. Access to and quality of secondary education has also improved by halving school fees, constructing schools, and introducing scholarships (under the Secondary Education Development Programme). COBET, a program in force since the 1990s, provides remedial education to school dropouts, apparently with appreciable results. Efforts to reform the vocational school system (VETA and Folk colleges) are on the agenda but still to be implemented. The ILO Project on Promoting Gender Equality and Decent Work throughout Life also aims at providing apprenticeship and skill training. Major interventions on the demand side have been directed to improve the business climate, to provide credit to micro-entrepreneurs (for example, the SELF program cofinanced by the Inter-African Development Bank and the government of Tanzania), and to provide public jobs with potential training content (through public-private partnerships, such as the DSM Solid Waste Management Programme, the ILO Integrated Urban Employment Promotion, which is part of the Jobs for Africa Programme, and Community-Based Programmers under the TASAF scheme). Finally, some efforts are being made to increase the match between the supply and the demand of labor (see the newly labor created Labor Exchange Centre in Dar Es Salaam,
13

One exception that emerges both in terms of coverage and presumed impact concerns the microfinance programs (for example, PRIDE and FINCA) that were implemented during the 1990s and that happened to benefit some young entrepreneurs. 14 These include, among others, the National Employment Policy of 1997, the National Poverty Eradication Strategy of 1998, the National Youth Development Policy, the Poverty Reduction Strategy of 2000, the National Strategy for Growth and Reduction of Poverty of 2004, the New Empowerment Policy of 2004, and the Income Tax Act 2004.

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for example) and to strengthen technical capability in government offices dealing with employment issues. Although it is still too early to evaluate the overall impact of these policies, the general impression one gets from a review of these (actual or planned) interventions is that youth unemployment has recently acquired a much greater emphasis in the policy agenda in Tanzania, financial resources have increased substantially to match the scale of the problem, and a much larger amount of coordination has been achieved. All these elements suggest that the government of Tanzania is potentially on the right path toward fighting the youth unemployment problem. 7. Summary of main findings

Labor force status and schooling choices Three-fourths of teenagers and youths in Tanzania live in rural areas. School attendance is far from universal, even among teenagers, and is higher in urban areas. Although the majority of urban youths attend school sometime in their life, a significant proportion of rural youths do not. Work participation is higher in rural areas, where school in combination with work is also widespread. Idleness is a phenomenon affecting a large proportion of urban youths and teenagers Girls are more likely to have never attended school and to drop out from school than boys are. Urban girls are more likely to work than boys are, although by adulthood this pattern is reversed.

Characteristics of those working Hours of work increase with age. Like employment patterns, young females in Dar Es Salaam work more hours than young males do, although by adulthood this pattern is reversed. Underemployment is not uncommon among urban youths, especially in Dar Es Salaam. Urban girls are more likely to be in paid employment and less likely to work in the family enterprise than boys are. As they age, urban boys move away from work in the household enterprise or farm into paid employment and self-employment.

45

In contrast to men, the proportion of females in salaried employment falls with age, while engagement in the household farm rises.

Characteristics of those not working Urban youths (and prime-age women to less extent) are at disproportionate risk of being unemployed compared with prime-age men. Inactivity rates are also high among urban youths and teenagers. Lack of job opportunities is often invoked by youths as a reason for not looking for a job. Inability and sickness explain a significant share of the prevalence of inactivity. Unemployed youths and teenagers are less likely to report waiting to fill a vacancy, more likely to use informal search channels, and less likely to attempt to set up their own business than prime-age individuals are. Youths are more likely to be long-term (or very long-term) unemployed than prime-age individuals are. Girls (and women) in general display shorter unemployment durations than boys (men) do, but this might be due to their unemployment spells ending in inactivity.

Determinants of youths labor force status and schooling choices Local labor demand and supply are important determinants of teenagers' and youth's employment in urban Tanzania. Excess labor demand increases employment and reduces inactivity in urban areas. Urban boys (but not urban girls) are more likely to combine work with school when local labor demand is stronger. School enrollment is unresponsive to the state of the local labor market. Labor market status of rural teenagers and youths is largely unresponsive to the state of the local labor market. Distance to school is an important factor explaining low school attendance among rural youths and teenagers. Family background is a strong predictor of school enrollment and labor force status. In urban areas teenagers and youths from better-off families are more likely to be in school and less likely to be inactive; in rural areas they are more likely to be in school and less likely to work.

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Focalizacin De Programas En Chile: El Sistema CAS by Osvaldo Larraaga, June 2005 (online only) Reforming Brazil's Cadastro nico to Improve the Targeting of the Bolsa Famlia Program by Bndicte de la Brire and Kathy Lindert , June 2005 (online only) Designing and Implementing Household Targeting Systems: Lessons from Latin American and The United States by Tarsicio Castaeda and Kathy Lindert, with Bndicte de la Brire, Luisa Fernandez, Celia Hubert, Osvaldo Larraaga, Mnica Orozco and Roxana Viquez, June 2005 (online only) Also available in Portuguese. Unequal Prospects: Disparities in the Quantity and Quality of Labour Supply in sub-Saharan Africa by John Sender, Christopher Cramer and Carlos Oya, June 2005 Pension Supervision: Understanding International Practice and Country Context by Richard P. Hinz and Anca Mataoanu, May 2005 Social Security Coverage in Latin America by Rafael Rofman, May 2005 A Technology White Paper on Improving the Efficiency of Social Safety Net Program Delivery in Low Income Countries: An Introduction to Available and Emerging Mobile Technologies by Mike Gallaher, May 2005 (online only) Aging and Poverty in Africa and the Role of Social Pensions by Nanak Kakwani and Kalanidhi Subbarao, May 2005 (online only) Delivery Mechanisms of Cash Transfer Programs to the Poor in Bangladesh by Shaikh S. Ahmed, May 2005 (online only) Portability Regimes of Pension and Health Care Benefits for International Migrants: An Analysis of Issues and Good Practices by Robert Holzmann, Johannes Koettl and Taras Chernetsky, May 2005 (online only) Who Has the Yam, and Who Has the Knife? Social Action Funds and Decentralization in Malawi, Tanzania, and Uganda by N. Mungai Lenneiye , May 2005

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Household Vulnerability and Childrens Activities: Information Needed from Household Surveys to Measure their Relationship by Diane Steele, May 2005 (online only) The Effect of Child Labor on Mathematics and Language Achievement in Latin America by Mario A. Sanchez, Peter F. Orazem, and Victoria Gunnarsso, May 2005 The Inter-Generational Persistence of Child Labor by Patrick M. Emerson and Andr Portela Souza, May 2005 How Does Working as a Child affect Wage, Income and Poverty as an Adult? by Nadeem Ilahi, Peter F. Orazem, and Guilherme Sedlacek, May 2005 Dynamics of Child Labor: Labor Force Entry and Exit in Urban Brazil by Suzanne Duryea, Jasper Hoek, David Lam and Deborah Levison, May 2005 The Responses of Child Labor, School Enrollment, and Grade Repetition to the Loss of Parental Earnings in Brazil, 1982-1999 by Marcelo Crtes Neri, Emily Gustafsson-Wright, Guilherme Sedlacek and Peter F. Orazem, May 2005 Child Labor, Schooling, and Poverty in Latin America by Guilherme Sedlacek, Suzanne Duryea, Nadeem Ilahi, and Masaru Sasaki, May 2005 Changing Patterns of Child Labor around the World since 1950: The Roles of Income Growth, Parental Literacy and Agriculture by Victoria Gunnarsson, Peter F. Orazem, and Guilherme Sedlacek, May 2005 Disability and Social Safety Nets in Developing Countries by Sophie Mitra, May 2005 Social Funds: A Review of Public Sector Management and Institutional Issues by Mukhmeet Bhatia, May 2005 Pension Reform in El Salvador by Rodrigo Acua, April 2005 How Changes in Benefits Entitlement Affect Job- Finding: Lessons from the Slovenian Experiment by Jan van Ours and Milan Vodopivec, April 2005

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A Guide to Multisector Labor Market Models by Gary S. Fields, April 2005 Multinational Enterprises and Training Revisited: Do International Standards Matter? by Niels-Hugo Blunch and Paula Castro, March 2005 Community-Based Health Insurance & Social Protection Policy by Steven Tabor, March 2005 (online only) Towards a Better Understanding of the Nature, Causes and Consequences of Youth Labor Market Disadvantage: Evidence for South-East Europe by Alexandre Kolev and Catherine Saget, March 2005 (online only) A Lecture on the Political Economy of Targeted Safety Nets by Lant Pritchett, January 2005 Can Conditional Cash Transfer Programs Improve Social Risk Management? Lessons for Education and Child Labor Outcomes by Elisabeth Sadoulet, Frederico Finan, Alain de Janvry and Renos Vakis, December 2004 Measuring Welfare for Small but Vulnerable Groups. Poverty and Disability in Uganda by Johannes G. Hoogeveen, September 2004 Institutional Analysis Toolkit for Safety Net Interventions by Inke Mathauer, August 2004 Trade Union Participation in the PRSP Process by Lawrence Egulu, August 2004 A New Approach to Social Assistance: Latin Americas Experience with Conditional Cash Transfer Programs by Laura B. Rawlings, August 2004 Shocks and Coffee: Lessons from Nicaragua by Renos Vakis, Diana Kruger and Andrew D. Mason, July 2004 Costs of Projects for Orphans and other Vulnerable Children: Case studies in Eritrea and Benin by Menahem Prywes, Diane Coury, Gebremeskel Fesseha, Gilberte Hounsounou, and Anne Kielland, July 2004 Disability Employment Policy by Daniel Mont, July 2004

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Child Labor, Education, and Childrens Rights by Gordon Betcherman, Jean Fares, Amy Luinstra, and Robert Prouty, July 2004 Challenges and Opportunities of International Migration for the EU, Its Member States, Neighboring Countries and Regions: A Policy Note by Robert Holzmann and Rainer Mnz, June 2004 Evaluating Different Approaches to Estimating Vulnerability by Ethan Ligon and Laura Schechter, June 2004 Transferring Cash Benefits Through the Banking Sector in Colombia by Maria Teresa Lafaurie V. and Claudia A. Velasquez Leiva, May 2004 Mitigating Social Risks in Kyrgyz Republic by Emil Tesliuc, April 2004 Toward a Reformed and Coordinated Pension System in Europe: Rationale and Potential Structure by Robert Holzmann, April, 2004 Boosting Productivity Via Innovation and Adoption of New Technologies: Any Role for Labor Market Institutions? by Stefano Scarpetta and Thierry Tressel, March 2004 Mitigating the Social Impact of Privatization and Enterprise Restructuring by David H. Fretwell, March 2004 Risk and Vulnerability in Guatemala: A Quantitative and Qualitative Assessment by Emil D. Tesliuc and Kathy Lindert, March 2004 Implicit Pension Debt: Issues, Measurement and Scope in International Perspective by Robert Holzmann, Robert Palacios and Asta Zviniene, March 2004 Impacts of Active Labor Market Programs: New Evidence from Evaluations with Particular Attention to Developing and Transition Countries by Gordon Betcherman, Karina Olivas and Amit Dar, January 2004 Consumption Insurance and Vulnerability to Poverty: A Synthesis of the Evidence from Bangladesh, Ethiopia, Mali, Mexico and Russia by Emmanuel Skoufias and Agnes R. Quisumbing, January 2004

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To view Social Protection Discussion papers published prior to 2004, please visit www.worldbank.org/sp.

Summary Findings
Although we are not the first to document the level of youth joblessness in Tanzania (Mjema 1997; Government of Tanzania 2003; LO/FTF 2003), our paper aims to shed some additional light on this phenomenon. First, we provide evidence on different dimensions of youths' labor market performance. For this exercise we can rely on micro data from the Tanzanian Integrated Labor Force Survey (ILFS) of 2000/01, a rather large household survey (approximately 11,000 households) that provides a rich array of information on employment, job search, schooling, training, and migration, together with basic information on individuals' and their households' characteristics. Second we attempt to uncover the determinants of youths' labor market outcomes and to tease out significant predictors of labor market success and failure using simple regression tools. HUMAN DEVELOPMENT NETWORK

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Social Protection Discussion Papers are published to communicate the results of The World Bank's work to the development community with the least possible delay. The typescript manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally edited texts. The findings, interpretations, and conclusions expressed herein are those of the author(s), and do not necessarily reflect the views of the International Bank for Reconstruction and Development / The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. For free copies of this paper, please contact the Social Protection Advisory Service, The World Bank, 1818 H Street, N.W., Room G7-703, Washington, D.C. 20433-0001. Telephone: (202) 458-5267, Fax: (202) 614-0471, E-mail: socialprotection@worldbank.org or visit the Social Protection website at www.worldbank.org/sp.