Of course, job creation goes hand in hand with the need to increase the employability of the poor. Thus it is necessary to increase educational opportunities for the poor, although education alone will not solve unemployment. In fact, in developing countries, the supply of educated people has often outpaced the supply of jobs to accommodate them, and unemployment rates tend to be higher among better-educated young people. This is certainly true in India, where “there is a widening chasm between students’ qualifications and employability. It sweeps the country, particularly its non-metropolitan regions.”44 Data from EGMM, for example, indicates the magnitude of the problem in the state of Andhra Pradesh (see table 6.2). The official unemployment rate among the educated was 7.3 percent, six points higher than the state’s overall unemployment rate of 6.7 percent. Educated people who cannot find employment are probably even more frustrated than less educated people.

Table 6.2 Education level and unemployment in Andhra Pradesh

Level of Education



10th grade


Not available


(Equivalent to 12th grade)



Vocational training; polytechnic; industrial training institute



University graduate



Engineering graduate



Even when economic growth generates employment opportunities, the problem is that these potential jobs might go unfilled because of friction in labor markets. The educational system sometimes graduates students without all the appropriate skills required by the employers. There is a mismatch between the curricula adopted by the schools and the requirements of the marketplace. There is a need for job training, or vocational training, especially for the poor. Companies have job openings and there are people with the right or almost right qualifications who need jobs, and yet the jobs and people do not get linked together. The poor may not be motivated to look for a job, and there are also the problems of lack of both information and labor mobility. Even if they are motivated, the poor often do not know where and how to search for a job. The transition too might be problematic, if, for example, it is the poor person’s first job, and/or the job is located in a geographically, socially, and culturally unfamiliar place.

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