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This report aims to provide a comprehensive package of timely and relevant input to the Government’s initiatives. In doing so, it brings together into one coherent framework and story-line both new analysis and previous work undertaken for the World Bank’s policy dialogue – in particular the Armenia Systematic Country Diagnostic and Drivers of Dynamism on constraints to growth, international integration, and poverty reduction, and the Skills Towards Employment and Productivity (STEP) surveys on the demand and supply of skills for the Armenian labor market.2 New analysis includes an updated view of the labor supply situation, labor productivity developments, and the links with recent overall macro and global trends. Because of data limitations, the demand side of the jobs agenda remains insufficiently explored, including analysis of the characteristics of job creating firms, the drivers of firm level productivity, and the constraints to firm growth, and hence to job creation. Ongoing data collection initiatives will help close these gaps over the short-to-medium term.

This Note is a stocktake summarizing evidence on “what works” in youth employment programs on both the supply and demand side. Employment outcomes refer both to direct and indirect job creation, including through firm start-up, as well as improvements in the quality of jobs as manifested in higher earnings as self-employment or increases in household income. This paper is based on an extensive desk literature review and analyzes the major meta-analysis and literature reviews on both the labor demand side and labor supply side.The supply side has a large body of evidence and evaluations of the whole Active Labor Market Policies (ALMPs) package as a whole. Kluve et al. (2016) and McKenzie, D. (2017) have a rigorous methodology and provide wide analysis and recommendations of the major studies on the supply side and provide the basis for that section. We supplement this information with key studies which had Randomized Control Trials (RCTs) or rigorous evaluations.In some sense the supply side stocktake is an analysis of a few existing meta analyses complemented by key studies not included in the meta-analysis. On the demand side the evidence base on what works for jobs outcomes is weak – so we used an extensive desk literature review. We include meta analysis where they exist for sections of the demand package (for example micro-credit). For both the supply and demand side, the team worked with experts across thematic areas (Agriculture, Social Protection, Entrepreneurship, Social Development and Urban Development) to ensure we had a mix of literature from the diverse thematic bodies included. The note does not look at evidence on policy reforms that address systemic problems. We recognize that rural and urban investment climates, regulatory frameworks, the overall macro-economic framework, human capital (education and training policy, basic health), are prerequisites for many interventions on the demand side of the labor market to be successful. In what follows, these fundamentals are taken as given and the note focuses primarily on interventions with specific identifiable enterprise, firm or farm beneficiaries, rather than broad investment climate reforms.