The impact of Mexico's retraining program on employment and wages

The authors evaluated how Mexico's Labor Retraining Program (PROBECAT) affected unemployment and displaced workers. As part of the World Bank supported Manpower Training project, PROBECAT has provided short-term vocational training to more than 250,000 unemployed people. Their evaluation was based on new longitudinal data on PROBECAT trainees developed for this purpose, and includes data on a control group of unemployed people who did not join PROBECAT. Their main findings were as follows: On average, the trainees found jobs more quickly than the control group. But training does not shorten the term of unemployment for those without work experience. Male trainees are more likely to be employed three and six months after training than are the controls. Female trainees with work experience are more likely to be employed three, six, and twelve months after training than are the controls. Male trainees are more likely to find employment in large firms than are comparable controls. Training increases the monthly earnings of male trainees, but this effect varies systematically depending on the person's level of schooling attainment. The monetary benefits of training outweigh the costs of the PROBECAT program for certain groups of trainees. For male trainees over 25 with prior work experience, the benefits outweigh the costs of training within three months of starting work. For all other males except those with no prior work experience, the benefits outweigh the costs within one year. Men with no prior work experience spend the longest time job hunting after training (8 months, compared with the trainee mean of 4.4 months) and benefit less from training in terms of monthly earnings (128 thousand pesos compared with the average benefit of 152 thousand pesos). For this group, the costs of training are offset only after 17 months of higher earnings.