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Improving Prospects for Displaced Workers

Improving Prospects for Displaced Workers. Robert J. LaLonde The Irving B. Harris Graduate School of Public Policy Studies The University of Chicago. The Bottom Line. Does Retraining Work? YES NO. What are the Questions?.

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Improving Prospects for Displaced Workers

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  1. Improving Prospects for Displaced Workers Robert J. LaLonde The Irving B. Harris Graduate School of Public Policy Studies The University of Chicago

  2. The Bottom Line • Does Retraining Work? • YES • NO

  3. What are the Questions? • Is retraining displaced workers a productive investment for society and for workers? • Yes • Does retraining substantially reduce the costs to displaced workers of losing a job? • No

  4. Defining Displaced Workers • Fact: most people who lose a job have not held the job for very long. • Job loss is not especially costly. • Do not consider these displaced workers. • Fact: on average job loss is very costly for people who have held a job for a long time. • BLS reports: 3 + years prior tenure. • Some firm specific skill/attribute is lost.

  5. Pattern of Displaced Workers’ Earnings Losses(Why is Job Loss Costly?) Earnings date of job loss B A s -2 s Time

  6. What Retraining? • Reemployment Services • Job Search Assistance • Retraining: • Programs designed for displaced workers. • Regular courses in community colleges and private technical/vocational schools.(CT) • On-the-Job training with private employers. (OJT) • Low intensity participation.

  7. Experimental Evidence • Texas Worker Readjustment Demonstration • Houston & El Paso 1984 - 85. • Average pre-displacement tenure: 3 - 4 years • White collar job holders: 2/3 Houston men • Cost per participant (2001$): $5,000; $1,700. • JSA followed by CT (Houston) or OJT (El Paso). • Mean weeks of training ~ 20 weeks. • Participation rates ~ 70%. • Earnings Impacts (first follow-up year): • Men: $800 (5%) Women: $1,675* (28%)

  8. Non-Experimental Evidence • An evaluation of returns to community college schooling in Washington State • Jacobson, LaLonde, and Sullivan • Nearly 100,000 displaced workers: 1990 - 1994 • 20% enroll in community college • 11% complete at least one (for credit) course. • Average age: 36 (men) 37 (women) • Completers complete 2/3 of an academic year … • Earnings Impacts (long-term impacts) : • Men: $1,100* (7%) Women: $972* (8%)

  9. Can We Teach Old Dogs New Tricks? • Compare under and over 35 year olds. • Earnings Impacts: • Under 35: • Men: $730* Women: $930* • Over 35: • Men: $1,140* Women: $720* • Older displaced workers less likely to enroll in and complete community college courses.

  10. Why Yes and No? • Gains for displaced workers from community college schooling are similar to those experienced by younger persons from formal schooling. • Keep in mind private cost of attending school is higher for older workers. • Impacts are modest compared to likely earnings losses due to displacement. • About 60% of completers complete 4 or fewer courses.

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