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Estimating the Effect of a Retraining Program for Displaced Workers on Their Transition to Permanent Jobs

  • Cavaco, Sandra


    (University of Paris 2)

  • Fougère, Denis


    (Sciences Po, Paris)

  • Pouget, Julien



In this paper we estimate the short-term effects of a French retraining program that was intended to improve reemployment prospects of displaced workers. Our empirical analysis uses non-experimental data collected by the French Ministry of Labour. Transitions from unemployment to permanent vs. temporary jobs are assumed to be generated by a dependent competing risks duration model. Moreover we assume that program entry but also direct transitions from the program to employment are both affected by a selectivity process depending on observable and unobservable individual heterogeneity. We find mixed evidence regarding relevance of the program. For displaced workers who join the program, program participation increases the average probability to obtain a permanent job by 8 points (passing from 42 to 50%). However, for displaced workers who do not join the program, this average probability would have been increased by 28 points (passing from 43 to 71%) had they participated in the program. We conclude that, although the program has been globally effective, it has been insufficiently proposed to the displaced workers who would have benefited the most from it.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1513.

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Length: 27 pages
Date of creation: Mar 2005
Date of revision:
Publication status: published in French under the title: "Conventions de conversion et retour à l'emploi", Economie et Prévision, 2004 (164-165), 93-111
Handle: RePEc:iza:izadps:dp1513
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  1. repec:oup:restud:v:64:y:1997:i:4:p:683-713 is not listed on IDEAS
  2. FLORENS, Jean-Pierre & FOUGERE, Denis & MOUCHART, Michel, 1995. "Duration Models," CORE Discussion Papers 1995016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Robert Gibbons & Lawrence Katz, 1989. "Layoffs and Lemons," NBER Working Papers 2968, National Bureau of Economic Research, Inc.
  4. David Margolis, 2000. "Worker Displacement in France," Working Papers 2000-01, Centre de Recherche en Economie et Statistique.
  5. Fougère, Denis & Kramarz, Francis & Magnac, Thierry, 2000. "Youth Employment Policies In France," CEPR Discussion Papers 2394, C.E.P.R. Discussion Papers.
  6. Mitali Das & Whitney K. Newey & Francis Vella, 2003. "Nonparametric Estimation of Sample Selection Models," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 33-58.
  7. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  8. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
  9. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1992. "Earnings losses of displaced workers," Working Paper Series, Macroeconomic Issues 92-28, Federal Reserve Bank of Chicago.
  10. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October.
  11. Bruce C. Fallick, 1995. "A review of the recent empirical literature on displaced workers," Finance and Economics Discussion Series 95-14, Board of Governors of the Federal Reserve System (U.S.).
  12. Lalive, Rafael & van Ours, Jan C. & Zweimüller, Josef, 2000. "The Impact of Active Labor Market Programs and Benefit Entitlement Rules on the Duration of Unemployment," IZA Discussion Papers 149, Institute for the Study of Labor (IZA).
  13. Paul Swaim & Michael Podgursky, 1991. "The Distribution of Economic Losses among Displaced Workers: A Replication," Journal of Human Resources, University of Wisconsin Press, vol. 26(4), pages 742-755.
  14. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
  15. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc.
  16. Dar, Amit & Gill, Indermit S, 1998. "Evaluating Retraining Programs in OECD Countries: Lessons Learned," World Bank Research Observer, World Bank Group, vol. 13(1), pages 79-101, February.
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