Improving Informal Sector Productivity and Opportunities for At-Risk Honduran Youth

Informality is a key characteristic of the Honduran labor market, which includes low-income and low productivity jobs. Informality has been persistent over time and there is a risk that it will increase if enough formal jobs are not generated in the post COVID-19 era. Therefore, it is important to develop policies that help improve the job security of young people engaged in the informal sector or at risk of entering informality.

Market imperfections have caused governments to intervene directly in the labor market with the objective of generating more and better jobs for workers (McKenzie, 2017); these interventions are known as active labor market policies (ALMPs).

This study seeks to inform USAID about opportunities and barriers for improved economic outcomes for youth in Honduras’ informal economy, and to showcase innovative ALMPs that are feasible in Honduras and can help vulnerable youth (15 -29 years old) in the informal sector secure a living income.