The Youth Employment and Demonstration Projects Act of 1977 (YEDPA) authorized a range of research, evaluation, and demonstration activities to increase understanding of the employment problems of youth and to help determine the most effective policies and programs to address these problems. A major knowledge development objective under YEDPA was to first take stock of what we know about youth employment and employability development problems and the approaches to overcoming them. This report provides an interpretive analysis of the information on the subject as well as guidance concerning directions for further knowledge development under YEDPA. Part 1 of this report addresses the problem and its multiple dimensions. In contrast to many other analyses that focus primarily on statistical measures of the dimensions of youth unemployment and participation levels under employment and training programs, this review emphasizes the underpinnings--developmental factors and how they impinge on each individual's preparation for the world of work; the linkage and transition institutions and how they operate, including the critical role of laws, regulations, and other public policies affecting youth employment; the multiple forces shaping the youth labor market, and youth preparation for it; and the underlying labor market theories and research covering their validity. Part 2 reviews program evaluations concerning experience-based learning, and education, training, and transition services. (KC)