Job Training Programs

What has been tried? How well does it work?

Job Training Programs Started in the 1960s (war on poverty) with Manpower Training and Development Act (MTDA) Implemented a variety of job training programs including Job Corps Updates include Comprehensive Employment and Training Act (CETA) in 1970s, Job Training Partnership Act (JTPA) in 1980s. Both moved control over programs away from Federal Government toward state governments. In 1998, Workforce Investment Act (WIA) DOL was to provide “one-stop” service These have generally been available to disadvantaged and other workers needing assistance, but all voluntary.

Job Training Programs There were also a variety of training programs aimed at aid recipients that were mandatory. Work Incentive Program (WIN) Required single parent recipients of AFDC who did not have pre- school aged kids to participate (consensus is that program had little effect) Job Opportunities and Basic Skills (JOBS) – 1988 More extensive than WIN, but still quite limited. Welfare-to-work (WtW) Part of welfare reform (AFDC to TANF) State based, with matching funds from Federal govt.

Job Training Programs In addition to those mentioned, there are also numerous smaller state programs and federal pilot programs, or more specialized targeted programs. In 1999, GAO identified 16 government sponsored training programs aimed at the economically disadvantaged, costing $16.2 billion and serving almost 3 million people. Should we expect these programs to have an effect? Largest program (under TANF) served almost 1 million people at a cost of about $1000/person Second largest (Food Stamp Employment and Training Program) served around ¾ million people at cost of $266/person.

Job Training Programs In 1999, US spent an average of $6500/student in school in 1 yr. Typical estimates of return to a year of education are roughly 8% So to get an increase of 10% in each trainee’s earnings capacity, govt would have to spend roughly $8000. Of all programs, only WtW, Job Corp, and a couple of local programs spend anywhere near that much (cover only 200,000 participants) Most training programs focus on resume/application writing, interviewing, job search skills. Not really new “productive” skills, rather skills that help participants distinguish themselves over other low-skilled workers.

Job Training Programs Evaluating job training programs What makes this so hard?

Job Training Programs Schochet, Burghardt, and McConnell. (2009). “Does Job Corps Work? Impact Findings from the National Job Corps Study.” American Economic Review. Job Corps yr old Legal US resident Economically disadvantaged Live in environment characterized by disruptive homelife, high crime neighborhood, limited job opportunities Need additional education, training, and job skills Free of serious behavior problems

Job Training Programs Program focused around residential job training centers. Training available for a variety of trades and academic skills (including GRE) Length of training varied, but on average 8 months. After completion, Job Corps placement services helps with job search. In 1995, services cost about $16,500 per participant.

Job Training Programs Study Interested in the long-term effects of Job Corps on education, earnings, and arrests. How does this study overcome the selection problem? Given the sampling methodology, what question can this study hope to help answer? What questions can it not answer?

Job Training Programs Study can answer: “What is the average effect of being allowed to enroll in Job Corps on outcomes for volunteering eligible individuals above and beyond other available programs?” (Impact per eligible applicant) “What is the average effect of enrolling in Job Corps on outcomes for volunteering eligible individuals above and beyond other available programs?” (IV estimates) (Impact per eligible participant) What is difference?

Job Training Programs What study cannot answer: “What is the average effect of being allowed to enroll or enrolling in Job Corps on outcomes for a randomly chosen individual?” “What is the average effect of being allowed to enroll or enrolling in Job Corps on outcomes for a random eligible individual?” Why not?

Job Training Programs Data Randomization occurred between Nov 1994 and Dec 1995 Follow-up surveys 12, 30, and 48 months after random assignment. Response rates for 48 month follow-up were 81% for treated, 78% for controls (what could be an issue here?) Administrative earnings records Tax records and Unemployment insurance records.

Job Training Programs Were those in “treatment” group treated? 72% enrolled Avg stay 8 months (though with large variation)

Job Training Programs Impacts on Education and Training

Job Training Programs Impacts on Earnings (using survey data)

Job Training Programs Longer-term impacts on Earnings (all data)

Job Training Programs Longer-term impacts by subgroup on earnings and arrests

Job Training Programs In Summary, Job Corps program seemed to have some effect on short-run Participants get more training, earn more, and are arrested less in the 4 yrs after enrollment. However, these effects are relatively small and appear to fade away over time. The most affected group in the long-term is older youth who get involved. Appears to offer a different type of opportunity than otherwise available to turn life around. More generally, most evidence suggests that tackling poverty via job training seems to be hard and expensive (should this really be surprising though?)