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Income Effects from Labor Market Training Programs in Sweden During the 80’s and 90’s

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  • Andrén, Thomas

    ()
    (National Institute of Economic Research - NIER)

  • Gustafsson, Björn Anders

    ()
    (University of Gothenburg)

Abstract

Swedish labor market programs appear large from an international perspective, yet their consequences are not fully investigated and understood. In this paper we estimate a switching regression model with training effect modeled as a random coefficient, partitioned in an observed and unobserved component. We investigate labor market training for three cohorts during the 80s and the beginning of the 90s on its effect on earnings. We separate the analysis between Swedish-born and foreign-born individuals to identify differences in their responses to training. The results indicate that there is positive sorting into training. We find that the proportion of trainees having positive rewards from training was not very different from the proportion having negative rewards. This means that the results do not support the view that from efficiency considerations, too few persons were enrolled in labor market training during this period. Differences in results across cohorts can be interpreted as being caused by rapid changes in the labor market. Further, consistent with results from several previous studies we find that being young often means no positive pay-off from training, and the same is found for persons with only primary education. In conflict with what earlier studies have shown, we found that males have a better pay-off from training than females. Rewards from training were higher for foreign-born than for natives and rewards among the former vary by place of birth.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 603.

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Length: 49 pages
Date of creation: Oct 2002
Date of revision:
Publication status: published in: International Journal of Manpower, 2004, 25 (8), 688-713
Handle: RePEc:iza:izadps:dp603

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Keywords: random coefficient model; labor market training; non-experimental estimator; positive sorting; unobserved heterogeneity to training reward;

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References

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  1. James J. Heckman & Jeffrey A. Smith, 1999. "The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies," NBER Working Papers 6983, National Bureau of Economic Research, Inc.
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  14. repec:rus:hseeco:10108 is not listed on IDEAS
  15. Carling, Kenneth & Larsson, Laura, 2002. "Does early intervention help the unemployed youth?," Working Paper Series 2002:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  16. Maria Melkersson, 1999. "Explaining choice set size for unemployed," Applied Economics, Taylor & Francis Journals, vol. 31(12), pages 1599-1607.
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  19. Broström, Göran & Palme, Mårten & Johansson, Per, 2002. "Economic incentives and gender differences in work absence behavior," Working Paper Series 2002:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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  23. Larsson, Laura, 2000. "Evaluation of Swedish youth labour market programmes," Working Paper Series 2000:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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