Language Log quotes a recent paper:
In the spring of 2004, a number of middle and high school teachers enrolled in a graduate linguistics class for teachers noted that their students at certain city schools were using yo in place of he or she. The authors collected spontaneous occurrences of the pronoun and then designed several writing activities and sentence judgment tasks. The tasks were administered to more than 200 students in two unrelated schools in Baltimore. It was clear from the results that students in these two schools use yo as a gender-neutral third-person singular pronoun, primarily in subject position.