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Evaluating an Innovative Redundancy-Retraining Project: The Austrian Steel Foundation

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  • Winter-Ebmer, Rudolf

    ()
    (University of Linz)

Abstract

This paper evaluates an Austrian manpower training program, which is highly innovative in its content and financing - and could therefore serve as a role model for other programs. In the late 1980s privatization and down-sizing of nationalized steel firms have lead to large-scale redundancies. A special Steel Foundation was created as part of a social plan. This Foundation acted like an independent training center, where displaced workers would spend relatively long training periods (sometimes several years), obtaining personality and orientation training, as well as formal education. The last step of the integrative program was placement assistance as well as assistance for creating one’s own business. The Foundation was financed by (higher) contributions from unemployment insurance funds, by the previous firms themselves, as well as by a collectively-bargained special tax on the remaining workers in the Steel Firms. Moreover the trainees themselves would have to support the Foundation by depositing their redundancy payments. In evaluating post-foundation economic performance I use days worked and wage growth. As a control group I take all other displaced workers from the firms who formed the Foundation, using Instrumental Variables to solve the selection problem. The results show considerable wage gains - even for a period of five years after leaving the Foundation - as well as improved employment prospects. Finally, a cost-benefit analysis is performed to assess the long-term success of the Foundation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 277.

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Length: 42 pages
Date of creation: Mar 2001
Date of revision:
Publication status: published as 'Coping with a structural crisis: evaluating an innovative redundancy-retraining project' in: International Journal of Manpower, 2006, 27 (8), 700 - 721
Handle: RePEc:iza:izadps:dp277

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Related research

Keywords: cost-benefit analysis; evaluation; Labor market programs; Instrumental Variables;

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References

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  1. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
  2. James J. Heckman, 2000. "Policies to Foster Human Capital," JCPR Working Papers 154, Northwestern University/University of Chicago Joint Center for Poverty Research.
  3. Ichino, Andrea & Winter-Ebmer, Rudolf, 1999. "Lower and upper bounds of returns to schooling: An exercise in IV estimation with different instruments," European Economic Review, Elsevier, vol. 43(4-6), pages 889-901, April.
  4. Fersterer, Josef & Winter-Ebmer, Rudolf, 1999. "Are Austrian Returns to Education Falling Over Time?," IZA Discussion Papers 72, Institute for the Study of Labor (IZA).
  5. Fitzenberger, Bernd & Speckesser, Stefan, 2000. "Zur wissenschaftlichen Evaluation der aktiven Arbeitsmarktpolitik in Deutschland: Ein Überblick," ZEW Discussion Papers 00-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. repec:fth:prinin:317 is not listed on IDEAS
  7. J.D. Angrist & Guido W. Imbens & D.B. Rubin, 1993. "Identification of Causal Effects Using Instrumental Variables," NBER Technical Working Papers 0136, National Bureau of Economic Research, Inc.
  8. Winter-Ebmer, Rudolf, 1996. "Benefit Duration and Unemployment Entry: Quasi-experimental Evidence for Austria," CEPR Discussion Papers 1521, C.E.P.R. Discussion Papers.
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