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Estimating the Return to Training and Occupational Experience: The Case of Female Immigrants

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Author Info

  • Cohen-Goldner, Sarit

    () (Bar-Ilan University)

  • Eckstein, Zvi

    () (Interdisciplinary Center (IDC) Herzliya)

Abstract

Do government provided training programs benefit the participants and the society? We address this question in the context of female immigrants who first learn the new language and then choose between working or attending government provided training. Although theoretically training may have several outcomes, most evaluations have focused on only one outcome of training: the expected wage. However, training might have no direct effect on wage, but, nevertheless, affect employment probability in higher paid jobs. In order to measure the return to government provided training, and overcome the above reservations, we formulate an estimable stochastic dynamic discrete choice model of training and employment. Our estimates imply that training has no significant impact on the mean offered wage in bluecollar occupation, but training increases the mean offered wage in white-collar occupation by 19 percent. Training also substantially increases the job offer rates in both occupations. Furthermore, counterfactual policy simulations show that free access to training programs relative to no training could cause an annual earnings growth of 31.3 percent. This large social gain (ignoring the cost of the program) comes mainly from the impact of training on the job offer probabilities and, consequently, on unemployment, and not, as conventionally thought, from the impact of training on potential earnings. Moreover, free access to training increases the average ex-ante expected present value of utility for a female immigrant at arrival (individual benefit) by 50 percent relative to the existing training opportunity.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1225.

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Length: 44 pages
Date of creation: Jul 2004
Date of revision:
Publication status: published in: Journal of Econometrics, 2010, 156 (1), 86-105
Handle: RePEc:iza:izadps:dp1225

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Keywords: immigration; occupation; training; transitions; unemployment; welfare;

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References

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Citations

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Cited by:
  1. Christian Belzil, 2006. "The Return to Schooling in Structural Dynamic Models: A Survey," Post-Print halshs-00142538, HAL.
  2. Haelermans Carla & Borghans Lex, 2011. "Wage effects of on-the-job training. A meta-analysis," Research Memoranda 011, Maastricht : ROA, Research Centre for Education and the Labour Market.
  3. Arbel, Yuval & Tobol, Yossi & Siniver, Erez, 2012. "Social Involvement and Level of Household Income among Immigrants: New Evidence from the Israeli Experience," IZA Discussion Papers 6416, Institute for the Study of Labor (IZA).
  4. Stephan L. Thomsen & Thomas Walter, 2010. "Temporary Extra Jobs for Immigrants: Merging Lane to Employment or Dead‐End Road in Welfare?," LABOUR, CEIS, vol. 24(s1), pages 114-140, December.
  5. Gil S. Epstein & Erez Siniver, 2012. "Can an ethnic group climb up from the bottom of the ladder?," Economics Bulletin, AccessEcon, vol. 32(3), pages 2414-2441.
  6. Cohen-Goldner, Sarit & Paserman, M. Daniele, 2011. "The dynamic impact of immigration on natives' labor market outcomes: Evidence from Israel," European Economic Review, Elsevier, vol. 55(8), pages 1027-1045.
  7. Gil S. Epstein & Erez Siniver, 2012. "Can an Ethnic Group Climb up from the Bottom of the Ladder?," Working Papers 2012-08, Department of Economics, Bar-Ilan University.
  8. Epstein, Gil S. & Siniver, Erez, 2012. "Can an Ethnic Group Climb Up from the Bottom of the Ladder?," IZA Discussion Papers 6796, Institute for the Study of Labor (IZA).
  9. Aldashev, Alisher & Thomsen, Stephan L. & Walter, Thomas, 2010. "Short-term training programs for immigrants: do effects differ from natives and why?," ZEW Discussion Papers 10-021, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Susumu Imai & Derek Stacey & Casey Warman, 2011. "From Engineer to Taxi Driver? Occupational Skills and the Economic Outcomes of Immigrants," Working Papers 1275, Queen's University, Department of Economics.
  11. McDonald, James Ted & Worswick, Christopher, 2011. "Incidence and Returns to Apprenticeship Training in Canada: the Role of Family Background and Immigrant Status," CLSRN Working Papers clsrn_admin-2011-3, UBC Department of Economics, revised 27 Jan 2011.
  12. Matti Sarvimäki & Kari Hämäläinen, 2011. "Assimilating Immigrants: The Impact of an Integration Program," Norface Discussion Paper Series 2011015, Norface Research Programme on Migration, Department of Economics, University College London.

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