Domestic Economy

Revisiting Youth Social Exclusion

Revisiting Youth Social Exclusion
Revisiting Youth Social Exclusion

The strength and longevity of protests led by young women and later joined by young men, which have engulfed Iran since mid-September, suggest that youth grievances go beyond the strict dress code. Years ago, in 2006, I directed the Middle East Youth Research Program at the Brookings Institution’s Wolfensohn Center for Development. In this post, I revisit the topic of youth social exclusion, which a few years later would be recognized as the main impetus to the Arab Spring protests, reads a recent post published by economist Djavad Salehi Isfahani on his weblog. The full text follows:
The main ideas of the youth project were laid out in ‘Stalled Youth Transitions’, which I co-authored with Navtej Dhillon. The paper proposed assessing the extent of youth social exclusion in the Middle East in terms of transitions from school to work and from adolescence to marriage and independent living (family formation). The project resulted in a series of papers on Middle Eastern countries that were published in 2009 as ‘Generation in Waiting’.
A chapter in the book discussed the case of Iran, written in 2007 with Daniel Egel. I discussed the same ideas in a 2008 paper ‘Growing Up in Iran’, asking why robust economic growth in the 2000s had failed to ease transitions to adulthood for young Iranians. No doubt this failure fueled the largest post-revolution demonstrations of 2009 in reaction to Mahmoud Ahmadinejad’s reelection. Thinking about the momentous youth protests of the last two-and-a-half months, I wondered how the same metrics of youth social exclusion have changed now that the bulge in youth demographics has passed.
I was not holding my breath because sanctions appeared on Iran’s social and economic scene. Given the more fragile position of youth in employment and family formation, it would not surprise me if the situation for youth was not much improved, or had even gotten worse since 2009. I re-read, with some trepidation, a paper that I had written in 2010, discussing the impact of sanctions on Iran’s youth. I was pleasantly surprised that it still made sense; it argued that sanctions would hurt the youth. At the time, I was refuting the claim in the US that ordinary Iranians would be spared the punitive effects of sanctions. 
Now, three decades later, that claim has been thoroughly debunked. In this context, I am shocked by calls for permanent sanctions coming from Iranians abroad, but not by cheers from pro-sanction US hawks in support of Iranian youth. There was no doubt that they saw them as a key target.
So, what does new data tell us about how transitions to employment and independent living have changed in the past dozen years?



Transition to Employment

Iranians have done well in accumulating years of schooling, but less so in acquiring productive skills, which is the human capital that improves one’s employment prospects. 
Since 1984, the average years of schooling of 20-year-olds have increased from 5 to 12. According to survey data, 38% of women in their twenties have at least some higher education, compared to 33% of men in the same age group.
But the improvement in education has not increased their chances of employment. Youth unemployment rates have been rising and are now several times the rate for older age groups. Fig. 1 depicts the unemployment rates for young (20-29) men and women from the mid-1980s to 2021. The rates have picked up considerably since 2000, reaching in recent years around 30% for men and 50% for women. About the same time, the unemployment rates for young women exceeded those of men. I am not sure what factors explain these changes, but the rising proportion of youth in the early 2000s and sluggish economic growth under sanctions after 2010 are surely high on the list.
These rates are consistent with the hypothesis that transition to employment has become harder for Iranian youth over time. Unemployment rates for older Iranians (ages 40-59) have also gone up but by much less, from 6-8%.
A closer look at the transition from school to employment is offered by data from Iran’s labor force surveys. The average years of waiting between graduation and the first job for university graduates has also been on the rise. The labor force survey asks those who are unemployed at the time of the interview how long they have been waiting since graduation. Because these are open intervals, estimates of duration are under-estimates. Fig. 2 shows the length of time an unemployed university graduate has waited since leaving school (2008-21).
Several important facts about youth transitions emerge from this graph. First, the average lengths of waiting are quite long, measured in years not months. Second, they have been rising since 2012, more evidence of the economic crisis precipitated by international sanctions, that is, the demand side of the labor market as the youth bulge had eased by 2010. Third, on average, women waited longer than men. Restricting the age range to 22-29, which are the more recent graduates in each year, reduces the estimates of the waiting times by about a year, but the positive slopes of the lines remain.



Transition to Marriage and Family Formation 

An important insight of the 2007 paper on ‘Stalled Youth Transitions’ was to point out the interdependence of the transitions to employment and to family formation. 
In the language of economics, successful youth transition to adulthood depended on navigating transition in the labor and marriage markets. Success in family formation requires finding a good future spouse and a place to call home, and these in turn depend on finding a job after graduation. Delayed transition to employment means waiting to get married, which imposes a huge social and psychological cost on youth, especially at a time and in a country where unmarried young people are not allowed to use public spaces to get to know each other.
Even if they found a job and their match in the marriage market, youth have had to contend with the unfriendly housing market. Many jobs did not have the stability that would justify bank lending for buying a home. Even with a good job, until recently, getting a mortgage was not easy because of the underdeveloped state of the mortgage market. As a result, most new couples forgo owning a home before middle age, and if their parents cannot accommodate them, they have to rent. Being in a rental unit, new couples have been severely exposed to Iran’s high inflation, running in excess of 40% in some years.
No surprise, then, that a large proportion of Iranian youth stay with their parents well into their twenties and even thirties.
In 2021, 38.5% of men and 33.6% of women in the 25-34 age group lived with their parents. The decline in the proportion of youth living with their parents in recent years is most likely the result of the easing of the youth bulge rather than easier transitions to family formation and independent living.
Demographic gyrations in Iran have in the past affected the marriage market severely. Whereas in 2010, the marriage market was characterized by a shortage of men, as Daniel Egel and I showed in the Brookings study, in 2022, it is characterized by a shortage of women. The imbalance is reversed but it is still an imbalance that adds to the difficulty of finding a match. 
Figure 4 shows the rising ratio of men of marriage age to women. In this figure, I assume a difference of five years in the age at first marriage between the age of men and women. The fluctuations in the sex ratio results from the fact that women reach their marriage age several years earlier than men and that changes in fertility affect the two sexes similarly.
The tremendous increase in the male-female sex ratio is evidence of a shortage of women, the opposite of the situation we described for the 2000s in the paper noted above. The imbalance characterized by a shortage of women causes its own difficulties, for example, the rising dowry that discourages marriage and puts a lot of pressure on young people. The rise in dowry is in part due to another imbalance linked to the rights of men and women in asking for divorce and retaining the custody of their children.
These graphs suggest that youth social exclusion in Iran has not abated with the passing of the youth bulge. Young people still face serious obstacles in finding a job and forming a family of their own.

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