In South Africa today, one of the most urgent economiC, social and political challenges is the extraordinarily high and increasing level of unemployment. While the economy has been growing steadily, unemployment levels have continued to rise. A large part of the problem is the fact that the number of new entrant~ outstrips the creation of new jobs (Ashton, 2005; Chichelo et aI., 2003). Since most of the new entrants are people making the transition from school and other education institutions into the labour market, it is not surprising that the problem of unemployment is more severe among the youth. Young people as a group are disproportionately affected by unemployment - whereas the unemployment level for adults is in the region of 26%, the rate for youth is 50%, while 58% of the unemployed are young people (Mlatsheni & Rosphabe, 2002). This paper looks at the factors that afTect employment among the youth in the Cape Town area. Using data from the 2002 and 2004 waves of the Cape Area Panel Study, cross-sectional and panel probit regressions have been employed to investigate the role of individual, household and schooling characteristics in the probability of employment. The results suggest that although household income and the presence of employed people in the household were important in a cross-sectional setting, previous labour narket experiences were more important in a dynamic setting. While quantity of schooling is found to be very important, the impact of quality of schooling could not be determined. The usual race and gender patterns in employment were found.