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An Econometric Cost-Benefit Analysis of Argentina's Youth Training Program

  • Víctor Elías
  • Fernanda Ruiz Núñez
  • Ricardo Cossa
  • David Bravo

The Youth Training Program (YTP) was an important component of Argentina’s active labor policy of the 1990s. The program offered courses of three months’ duration, divided equally between lectures and practical experience, and targeted young people, most of whom were not employed and had a low level of education. The program was offered by different institutions chosen through a bidding process and included courses in the fields of agriculture, manufacture, construction and services. This paper conducts an econometric cost-benefit analysis of the fifth round of the YTP. Benefits (wage increases, increase in likelihood of employment, increase in earnings) are estimated using non-matching (Before and After, Cross Section and Difference in Difference) and matching techniques based on propensity score estimate (Nearest Neighbor, Kernel, Local Linear Regression) in order to avoid selection bias. Estimates of the ATE and TT effects are also provided. A sample consisting of 1,670 beneficiaries and a similarly-sized comparison group provided the information necessary to apply the methodology. Benefit estimates are made for the aggregate, by gender and for both youth and adults. Regional differences are also provided. The cost includes direct and indirect components and the alternative cost of beneficiaries reducing their contributions to output during the program. Estimates of rate of return are provided based on the previous benefit and cost estimation. In general, the results support an estimate of 10 percent of return. This looks reasonable if it is compared with the very low rate of return of education estimated separately for the beneficiaries group. Finally, the management of the program is evaluated.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 3174.

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Date of creation: Nov 2004
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Handle: RePEc:idb:wpaper:3174
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  1. James J. Heckman & Jeffrey A. Smith, 1998. "Evaluating the Welfare State," NBER Working Papers 6542, National Bureau of Economic Research, Inc.
  2. James J. Heckman & Justin L. Tobias & Edward Vytlacil, 2000. "Simple Estimators for Treatment Parameters in a Latent Variable Framework with an Application to Estimating the Returns to Schooling," NBER Working Papers 7950, National Bureau of Economic Research, Inc.
  3. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
  4. Jalan, Jyotsna & Ravallion, Martin, 2003. "Estimating the Benefit Incidence of an Antipoverty Program by Propensity-Score Matching," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(1), pages 19-30, January.
  5. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
  6. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  7. Heckman, James J & Smith, Jeffrey, 1997. "Making the Most Out of Programme Evaluations and Social Experiments: Accounting for Heterogeneity in Programme Impacts," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 487-535, October.
  8. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
  9. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  10. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-20, September.
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