1 Inter-American Development Bank IDB Labor Training Programs and their Evaluation POVERTY AND SOCIAL PROTECTION NETWORK 9 TH HEMISPHERIC MEETING Pablo Ibarrarán (OVE) and David Rosas (SCL/SPH)

2 Index Labor training programs in LAC IDB and labor training Previous evaluations Evaluation of IDB’s labor training programs Conclusions Recommendations Inter-American Development Bank

3 I.Training programs in LAC (Youth) unemployment and underemployment are high and a main concern to citizens and governments. Overall, training is determined by National Training Institutes: Inter-American Development Bank A.Background B.The traditional training model They include all aspects of training: financing, regulation and provision. They have economic and political power. They do not service unemployed youth looking for a first job, nor the more vulnerable populations.

4 II. IDB and labor training Starting in the 90s, the IDB has promoted alternative training schemes based on demand: Inter-American Development Bank A.Alternative schemes The Chile Joven (Young Chile) scheme, with short-term training complemented by a working experience and aimed at disadvantaged youth. Mexico’s active policies, which include information, orientation, intermediation, training for the unemployed and training for active SME’s workers. Essential role of the private sector.

5 II. IDB and labor training (cont.) To improve “employability”: overall the aim is increasing the beneficiaries’ labor insertion. Inter-American Development Bank B.General objectives To tackle structural unemployment, improving labor offer conditions and the efficiency of the searching process in the labor market. To update active workers’ skills. To solve market defects (externalities, asymmetric information).

6 III. Previous evaluations Documents show that, overall, labor training programs have limited impact. Inter-American Development Bank Few evaluations were made in LAC and different methods and indicators were used. In general, rather heterogeneous results were reported. There was no thematic nor rigorous evaluation of the alternative schemes proposed by the IDB.

7 IV. Evaluation of IDB programs Program revisions in Argentina, Chile, Colombia, Mexico, Panama, Paraguay, Peru and Dominican Republic. Inter-American Development Bank Main difficulty: Main difficulty: Wide variability regarding the impact evaluation scheme. A.Sample CHVEAR_aAR_bPRME_aME_bPEDRCOPN Increase Employment/EmployabilityXXXXXXXXXXX Increase WagesXX Social InsertionXXXXX Enhance Labor Market EfficiencyXXX Raise ProductivityXXXXXX Develop a Private Market for Training ServicesXXXXXXXXX Reform a National Training InstitutionX DEVELOPMENT OBJECTIVES

8 Inter-American Development Bank B.Impact indicators What would we have liked to evaluate? “Employability” Productivity Social insertion What have we been able to evaluate (in some cases)? Employment rate Wages / Employment Quality Participation Rate/ Reinsertion into the educational system IV. Evaluation of IDB programs (cont.)

9 Inter-American Development Bank C.Results IV. Evaluation of IDB programs (cont.)

10 Inter-American Development Bank IV. Evaluation of IDB programs (cont.)

11 V. Conclusions These programs are not the solution to unemployment nor to underemployment but they do contribute to improve the labor situation of a specific population group: Inter-American Development Bank Modest and not homogeneous effects in employment which vary according to age, region and gender. Positive impacts on the quality of jobs and modest ones on wages. The design must consider the economic policy of the National Training Institutes. Participation of the private sector is essential to ensure that the courses are indeed based on demand. The best way to do it is having the private sector cover part of the costs.

12 V. Recommendations Training programs are useful tools to improve labor market insertion of a well defined group of beneficiaries. Inter-American Development Bank Complete diagnosis. Solid evaluation design. Definition of indicators that allow answering specific questions posed by evaluation. These programs must be part of a comprehensive strategy to promote productive investment and employment The design of these programs must be improved: