Financial capability and asset-building interventions have long been overlooked as a mechanism for improving employability and employment outcomes. Previous research has established a positive link between participation by young work seekers in youth employment programmes (YEPs) and employment outcomes post-training. These programmes include soft skills training, job matching, and/or financial capability. Little is known about the mechanisms by which financial capability interventions achieve this effect. This article investigates this question through mediation analyses of a longitudinal sample of young work seekers in YEPs from disadvantaged backgrounds. It finds that financial capability training combined with a stipend significantly improves the odds of employment, primarily through strong direct effects that are not fully captured by our mediation analyses. However, pathways are heterogeneous and time-dependent. For the most food-insecure participants, there is a clear mediation pathway: cash and financial literacy increase reported active saving practices, which in turn significantly improve employment. Conversely, for the same group, achieving basic economic stability was negatively associated with employment, suggesting cash may reduce pressure to accept precarious employment. But these positive effects dissipate up to two years after exiting training, at which point only job matching and having been trained in a metropolitan area predict employment. More research is required to understand how financial capability and cash improve employment odds for young people. Regardless, there is strong evidence to suggest that they are effective, at least in the short term, and that multi-component labour market and social protection interventions are needed that combine training and financial capability with focused efforts to address the structural challenges young work seekers face.

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Keywords

Youth unemployment, Youth employment programmes, Financial capability, Social protection, Active labour market programmes