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Should we teach old dogs new tricks? the impact of community college retraining on older displaced workers

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Author Info

  • Louis S. Jacobson
  • Robert LaLonde
  • Daniel G. Sullivan

Abstract

This paper estimates the returns to retraining for older displaced workers--those 35 or older--by estimating the impact that community college schooling has on their subsequent earnings. Our analysis relies on longitudinal administrative data covering workers who were displaced from jobs in Washington State during the first half of the 1990s and who subsequently remained attached to the state’s work force. Our database contains displaced workers' quarterly earnings records covering 14 years matched to the records of 25 of the state's community colleges. We find that older displaced workers participate in community college schooling at significantly lower rates than younger displaced workers. However, among those who participate in retraining, the per-period impact for older and younger displaced workers is similar. ; We estimate that one academic year of such schooling increases the long- term earnings by about 8 percent for older males and by about 10 percent for older females. These per-period impacts are in line with those reported in the schooling literature. These percentages do not necessarily imply that retraining older workers is a sound social investment. We find that the social internal rates of return from investments in older displaced workers' retraining are less than for younger displaced workers and likely less than those reported for schooling of children. However, our internal rate of return estimates are very sensitive to how we measure the opportunity cost of retraining. If we assume that these opportunity costs are zero, the internal rate of return from retraining older displaced workers is about 11 percent. By contrast, if we rely on our estimates of the opportunity cost of retraining, the internal rate of return may be less than 2 percent for older men and as low as 4 percent for older women.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-03-25.

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Date of creation: 2003
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Handle: RePEc:fip:fedhwp:wp-03-25

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Keywords: Displaced workers ; Education;

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References

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  1. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
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  16. Garces, E. & Thomas, D. & Currie, J., 2000. "Longer Term Effects of Head Start," Papers 00-20, RAND - Labor and Population Program.
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  23. repec:mpr:mprres:3005 is not listed on IDEAS
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Citations

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Cited by:
  1. Albrecht, James & van den Berg, Gerard J & Vroman, Susan, 2007. "The aggregate labor market effects of the Swedish knowledge lift program," Working Paper Series 2008:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Albrecht, James & van den Berg, Gerard J & Vroman, Susan, 2004. "The knowledge lift: The Swedish adult education program that aimed to eliminate low worker skill levels," Working Paper Series 2004:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Ci, Wen & Galdo, José & Voia, Marcel & Worswick, Christopher, 2013. "Does adult training benefit Canadian workers?," CLSSRN working papers clsrn_admin-2013-42, Vancouver School of Economics, revised 26 Sep 2013.
  4. Palameta, Boris & Zhang, Xuelin, 2006. "Participation in Adult Schooling and Its Earnings Impact in Canada," Analytical Studies Branch Research Paper Series 2006276e, Statistics Canada, Analytical Studies Branch.

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