Academic journal article The European Journal of Comparative Economics

School-to-Work Transitions in Mongolia

Academic journal article The European Journal of Comparative Economics

School-to-Work Transitions in Mongolia

Article excerpt

Introduction

The aim of this paper is to study the influence of youth education on: a) the accumulation of human capital; 2) and the distribution of incomes. According to UNDP (2006), Mongolia features as one of the 50 poorest countries in the world and understanding the difficulties young people face is important for the future growth prospects of the country. As new growth theory has ascertained, in fact, the fight against poverty and income inequality should have as one of its main instruments an increase in the human capital level of the population. In turn, this requires increasing the investment in human capital of the youngest generation. In addition, the case of Mongolia might be of interest also for understanding the youth labour market problem in other developing and transition countries, especially in the Asian continent.

Economic transition from plan to market has brought important changes to the country's education system and the youth labour market, which has dramatically modified the structure of incentives for young people and their families to invest in the formation of human capital. This paper provides an assessment of such incentives in the mid-2000s by looking at both the impact of human capital on employment opportunities and earnings. Previous studies (such as, for instance, Gerelmaa, 2005) argued that the disruption of agricultural cooperatives and state farms has reduced incentives to invest in primary education. This paper adds arguments as to why also secondary (and tertiary) education is underdeveloped, by showing that its supply is low relative to demand.

Relatively little is known about the youth labour market in Mongolia. Previous studies have looked at the drop-out rate or at other specific aspects of the school-to-work transition process (UNDP, 2007; Gerelmaa, 2005; National Tripartite Plus Youth Committee, 2005; Morris and Bruun, 2005; Darii and Suruga, 2006). This paper addresses the issue by taking advantage of a recent ad hoc School to Work Transition Survey (SWTS) of young people aged 15-29 years (3) carried out in 2006 by the National Statistical Office of Mongolia (NSO) with the International Labour Office's (ILO) financial and technical assistance.

The Survey was conducted through interviews of a sample that reflected the composition of the targeted population. Information was collected through a questionnaire that captures both quantitative and qualitative data relating to a number of aspects (e.g. education and training, perceptions and aspirations in terms of employment and life goals and values, job search processes, family's influence in career choice, barriers to and supports for entry into the labour market, wage versus self-employment preference, working conditions, etc.). A second questionnaire gathered information from employers with the aim of determining the extent of demand for young workers and the attitude and expectations of employers when hiring them.

The outline of the paper is as follows. Section 1 looks at the historical evolution of the country and at the youth labour market in the aftermath of transition from plan to market. Section 2 focuses on the determinants of educational attainment at an individual and family level. Educational attainment is relatively high and increasing in Mongolia, as compared to other countries in the area, which mirrors the perceived need for new and higher skills, confirmed by the aspirations of young people declared in answers to questions of the SWTS. Nonetheless, important constraints seem to affect the supply of education, especially in rural areas. In addition, as discussed in the Sections 3, the country is unable to provide young people with a sufficient number of decent jobs. This translates into high youth unemployment in urban areas and very low productivity jobs in rural areas, especially in the livestock sector. In addition, results of Mincerian earnings equations suggest that returns to educational attainment are high relative to other transition countries, especially in urban areas. …

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