Session 5:Training opportunities for quality transitions Chair: Anneleen FORRIER, K.U. Leuven/Lessius Antwerpen, Belgium Joost BOLLENS - K.U. Leuven, Belgium Lars SKIPPER - Aarhus University, Denmark Michael LECHNER - University of St. Gallen, Switzerland
Translation Channel X= Dutch Channel Y= English
Training in Flanders (Belgium) Evaluation of an on the-job-training programme for the unempoyed Joost Bollens, K.U.Leuven
Training for the unemployed Important ingredient of ALMP s # Participants % of ALMP budget Intuitively, that seems right However : evaluation results mixed & rather pessimistic
Effectiveness of training Often: net effectiveness absent, or even negative Cost effectiveness Locking in effects Possibly offset by better or more enduring jobs afterwards? Short versus long term effects
Effectiveness of training Be careful: what is training? Black box What subject (and demand oriented or not?) For whom? By whom? (experience, scale, ) Type? (classroom, on-the-job, ) Intensity? Duration??
Effectiveness of training Black box, contnd. Timing of intervention? Combined with other ALMP s? Order? Business cycle conditions? Instrument for tight labour market: avoid bottlenecks? But : locking in less problematic if high U?
IBO ( Individuele beroepsopleiding in de onderneming ) Individual vocational training, on-the -job Initiative : employer When no alternative For unemployed 1 to 6 months During training : UB + additional bonus Afterwards recruitment Possibility to present their own candidate
Number of participants IBO-participants 2000-2008, by sex and year of participation (in absolute numbers and column percentages) (2008 incomplete) 2000 2001 2002 2003 2004 2005 2006 2007 2008 Male 3581 5002 5271 6952 8673 9641 10989 10193 8250 68.89 69.77 68.10 69.79 71.10 70.12 71.14 69.32 70.38 Female 1617 2167 2469 3010 3525 4108 4457 4512 3472 31.11 30.23 31.90 30.21 28.90 29.88 28.86 30.68 29.62 Total 5198 7169 7740 9962 12198 13749 15446 14705 11722
Highly selective Not much women Migrants underrepresented More than 50% short term unemployed ( 3 m) 55% younger than 25 Relatively less low skilled Selectivity remains over entire period
Effectiveness Two kinds of information Unemployment register (entire period): either unemployed, or not (monthly) From 2003 : working or not working (monthly)
Work 1 2 3 4 5 6 7 8 9 10 11 12 A working working working u u u working working working B working working working working working working working working working working working working C u working working working u "First" situation Entire Period Absolute Relative Absolute Relative A 3 3/9 = 33% A 6 6/9=66% B 12 2/12=100% B 12 2/12=100% C 0 0/5=0% C 3 3/5=60%
First situation First situation after terminating the training : continuous period of work as % of the totally observed period (participants 2003-2008) Percentage 0% (training is followed by "non-working" period) 22.24 Less than 10% 14.76 25 till 50% 7.52 50 till just under 100% 7.89 100% (entire period, always working) 47.59
Entire period % of working months within the entire observed period since terminating the training (participants 2003-2008) Percentage Never worked after training 4 Less then 10% 1.69 10 till 25% 4 25 till 50% 8.5 50 till 100% 34.22 Always worked since training 47.59
Net effectiveness Outcome very positive Due to programme, or due to selectivity? What would have been outcome in the absence of the programme? Compose comparison group via matching technique (Propensity Score Matching)
Matching Basic idea: find for every participant, a nonparticipant with comparable characteristics Matching on sex, age, unemployment duration, educational attainment, province, month and year of terminating the training Selection on observables, not on unobservables
Net effect Here : unemployed or not unemployed ( working or not working) From 2000 onward ( 2003) In graph : % not unemployed Starting in first month after terminating the training Until 12.2008
% not unemployed 1 Aandeel niet-werkzoekend 0.8 0.6 0.4 0.2 0 1 6 12 18 24 30 36 48 Vergelijkingsgroep IBO 60 72 84 94
Low skilled & LTU 1 0.8 0.6 0.4 0.2 0 Aandeel niet-werkzoekend 1 6 12 Vergelijkingsgroep IBO, laaggeschoold langdurig werkloos 18 24 30 36 48 60 72 84 94
Business cycle : gross effect 1 Aandeel niet-werkzoekend 0.8 0.6 0.4 0.2 0 1 6 12 18 24 30 36 V2000 IBO2000 V2007 IBO2007 48 60 72 84 94
Business cycle : net effect Net effectiveness of the training, in blocks of 12 months after terminating the training, and per calender year 1st year 2nd year 3rd year 4th year 5th year 6the year 2000 52.4% 32.3% 15.6% 10.0% 7.7% 7.3% 2001 47.3% 27.8% 12.3% 8.6% 8.4% 7.4% 2002 46.5% 27.1% 14.4% 11.2% 10.8% 10.0% 2003 46.2% 26.4% 15.4% 13.1% 13.5% 11.2% 2004 47.7% 28.5% 18.3% 16.9% 16.7% 2005 47.3% 29.5% 20.0% 17.1% 2006 48.4% 30.8% 19.9% 2007 44.9% 20.8% 2008 47.8%
Conclusion Two objectives As an answer to skill shortages, avoiding bottlenecks Potentially high benefits But dead weight possible : monitor entrance As activating measure Who enters, clearly benefits But probalility of entering unequally divided How to change this?
The Costs and Benefits of the Danish Active Labour Market Programmes Lars Skipper Aarhus University, Denmark
Unemployment in Denmark
Unemployment in Denmark
Effects of Danish ALMPs Comparison of accumulated value of earnings effects with direct operation costs of programmes corrected for marginal cost of public funds Consider long-run outcomes (11 years of data) Differences in short and longer run effects important
Private Returns to Danish ALMPs Annual earnings effects (Impressive) short-run effects for OJT-programmes 5,500 per year (close to 50%) (Expected) short-run effects for educational -2,000 per year (around 20%)
Private Returns to Danish ALMPs Annual earnings effects Longer-run effects for private OJT 2,200 per year (15 %) Longer-run effects for public OJT 500 per year (4%) Longer-run effects for educational programme 1,100 per year (8%)
Social Returns to Danish ALMPs Benefits and costs accounted for: Direct effects on earnings Reduced distortions from taxation due to saved UIbenefits Direct programme costs (administration of programmes, education material, teacher hours) Wage subsidies during job training (value of production during job training equals wage minus subsidy
Social Returns to Danish ALMPs Benefits and costs not accounted for Value of reduced leisure Displacement of non-subsidized workers Effects on well-being of participants Ex ante effects
Social returns to Danish ALMPs Net Present Value per Participant Private On-the-Job Training: 37,000 Public On-the-Job Training: 12,000 Educational Programmes: -11,000
Michael LECHNER University of St. Gallen, Switzerland
The individual effects of recent German active labour market programmes Antwerp, October 2010 Michael Lechner www.sew.unisg.ch/lechner
Plan of talk Overview of some recent work for Germany, Austria, & Switzerland More detailed discussion of the most recent paper Michael Lechner, p. 34
What do we know so far from our own recent work (I)? Lechner, Miquel, Wunsch (forthcoming Journal of the European Economic Association) First use of large German administrative data Training programmes only Programmes in 1993 / 1994 Observe outcomes over 8 years LMW find all programmes have negative effects in the short run (lock-in) practise firms seem to have no positive non-subsidised employment effects retraining (up to 3 years) has no positive effects in the East all other programmes appear to have positive effects on earnings and n.s. employment in the long run (after 3 to 4 years depending on duration) no effects on registered unemployment (programmes increase n.s. employment and reduce part of individuals that are out of the labour force ) Michael Lechner, p. 35
What do we know so far from our own recent work (II)? Lechner, Wunsch (forthcoming in Journal of Labor Economics) More extensive use of this new database over time Training programmes only West Germany only Programmes from 1986 1995 (monthly inflow) Only aggregate of programmes could be considered Observe outcomes over 8 years LW06 find all programmes have negative effects in the short run (lock-in) no effects on registered unemployment (programmes increase employment and reduce share of individuals that are out of the labour force ) effects are positively related to unemployment rate in bad times lock- in effect is less severe Policy conclusion: Acyclical programme volumes Michael Lechner, p. 36
What do we know so far from other work? Fitzenberger and Speckesser (2005), Fitzenberger, Osikominu, Völter (2007): - training conducted 1993-1994 (1997) - negative employment effects in short run (lock-in effects) - lasting positive effects in medium to long run for most training programs - subsidized and non-subsidized employment is not distinguished Biewen, Fitzenberger, Osikominu and Waller (2006): - 3 types of training conducted 2000-2001 - positive effects for women with longer unemployment durations and in some cases also for men but: small samples in those subgroups! Caliendo, Hujer and Thomsen (2004-2006): - subsidised non-market jobs in February 2000 - no effects on unsubsidized employment Michael Lechner, p. 37
What do we know so far from our own recent work (IV)? Lechner and Wiehler (forthcoming in Journal of Population Economics; Oxford Bulleting of Economics & Statistics) Austria 2000-2002 Hardly any positive effects for men Some positive employment effects for women (because non-participants are more likely to get pregnant, 'kids or courses') Second paper based on dynamic treatment model Michael Lechner, p. 38
What do we know so far from our own recent work (V)? Behncke, Frölich, Lechner (2005 report to Government, JRSS-A, 2009, Journal of Business, 2008, ) Switzerland 2003 No evaluation of ALMPonly, but of all of the councelling process Merge case workers (questionaires+admin. data) with clients (admin. data) Analyse different councelling styles, tools, allocation mechanism of clients to case workers Tough case workers are more successful (increase n.s. employment) Allocation of clients to similar case worker increase reemployment chances (education, gender, age) Direct employer contacts are important for reemployment
What do we know so far from our own recent work (VI)? Behncke, Frölich, Lechner (Swiss Journal of Economics & Statistics) Lechner and Smith (2007) showed that effect of ALMP can be improved by better allocating the participants to the optimal programmes Implement an internet based targeting system in 21 employment offices in Switzerland SAPS: Produces impact estimates of different programme groups (8) for narrowly defined types of unemployed Case workers may use it voluntarily German TREFFER uses similar ideas, but different econometrics... SAPS: True experimental evaluation (social experiment) SAPS had no effect because case workers did not follow it Why? Overconfidence? Ignorance? Sabotage (cantonal autonomy / job of case workers at stake?)?
What Did All the Money Do? On the General Ineffectiveness of Recent West German Labour Market Programmes Antwerp, October 2010 Conny Wunsch and Michael Lechner www.sew.unisg.ch/lechner
The programs we evaluate Conny Wunsch, Michael Lechner, p. 44
The data Rich admininistrative individual data from various sources Conny Wunsch, Michael Lechner, p. 45
Results: Programs fail to increase employment Conny Wunsch, Michael Lechner, p. 51
Results: Programs increase unemployment Conny Wunsch, Michael Lechner, p. 52
Results: Programs induce further program participation Conny Wunsch, Michael Lechner, p. 53
Results: Does anyone benefit from the programs? Some positive employment effects for: unemployed without vocational education in short training (ST), often in combination with temporary wage subsidies short combined measures (SCM) and short general training (GT6) when used later in unmployment spell unemployed with bad employment prospects in job related training (JRT) Conny Wunsch, Michael Lechner, p. 55
Conclusion from this recent paper Wunsch, Lechner (West: Kyklos, 2009, East: forthcoming in Economics of Transition) New and more informative database Training and other programmes Programmes from 2000-2002 Observe outcomes only over 2.5 years WL find all programmes have negative effects in the short run (lock-in) no effects on registered unemployment (programmes increase employment and reduce part of individuals that are out of the labour force ) programmes have either negative or no effects over 2.5 years time horizon too short for longer programmes but most effects seem to stabalize at non-positive levels reallocation of programme participants could improve effects Using new data in which outcomes are observed for 4 years seems to suggest positive effects for more substantial training programmes (not in paper) Conny Wunsch, Michael Lechner, p. 62
Overall assessment All programmes have negative effects in the short run (lock-in effects) in terms of unsubsidized employment Almost all types of programme appear to increase (not decrease) registered unemployment (and benefit receipt) It seems that if there are any employment effects, they work via reducing the number of individuals in 'out-of-the labour force' Training programmes sometimes have positive effects in the long run (after 3 to 4 years, or even longer depending on the length of the programme) Programmes are more effective in a recession, because the lock-in effect is less pronounced (more difficult to find a job even for the non-participants) Michael Lechner, p. 63
Thank you for your attention! p. 65
Q & A
Lunch Foyer
Active Labour market policies for the EUROPE 2020-strategy Ways to move Forward