Evaluating Retraining Programs in OECD Countries: Lessons Learned

Abstract

Are retraining programs for the unemployed more effective than job search assistance? Governments of the member countries of the Organisation for Economic Cooperation and Development have considerable experience with retraining programs in a variety of industrial settings. Evaluations of these programs show that the results are disappointing, however. This article discusses the factors associated with retraining programs for two types of workers: those laid off en masse and the long-term unemployed. Evaluations indicate poor results for both groups: retraining programs are generally no more effective than job search assistance in increasing either reemployment probabilities or postintervention earnings, and they are between two and four times more expensive than job search assistance. Industrial countries spend sizable amounts on labor programs for the unemployed. In 1992 member countries of the Organisation for Economic Cooperation and Development (OECD) spent between 0.1 percent (Japan) and 2.6 percent (Sweden) of gross domestic product on labor programs. In several countries this training is "the largest category of active programs, and is often perceived as the principal alternative to regular unemployment benefits" (OECD 1994a). Countries in Eastern Europe-where the role of active labor programs is a topic of current debate-also spent between 0.2 and 3 percent of gross domestic product on these programs (OECD 1994a). Yet possibly because such assistance is viewed almost as a fundamental right in Western Europe, these programs are rarely evaluated outside the United States. This article surveys evaluations of retraining programs in the OECD countries, highlighting the shortcomings of such schemes and illustrating the payoff to investing in rigorous evaluations. We examine only the evaluations of retraining programs, so our focus is largely on adults with previous work experience rather than on unemployed school-leavers. We distinguish here between retraining schemes for workers displaced by plant closures

Start-up subsidies for the unemployed: Long-term evidence and effect heterogeneity

“…In fact, they do find some positive results for certain subgroups, for example training for the long-term unemployed, or women. Dar and Gill (1998) consider retraining programs in OECD countries and are not able to identify significant effects. Focusing on Europe, Kluve and Schmidt (2002) find strong heterogenous effects for different programs and subgroups and argue that job search assistance and training might be effective.…”

“…Much research has been dedicated to investigating the effectiveness of ALMP programs. Although positive results with respect to income and employment prospects were found occasionally, the overall evidence indicates that the effects of those traditional measures are rather disappointing (see Martin and Grubb, 2001;Dar and Gill, 1998;Dar and Tzannatos, 1999;or Fay, 1996 for evidence on OECD countries and Kluve and Schmidt, 2002 for the European experience). In particular, job creation schemes turn out to be not appropriate for improving participants' employment perspectives.…”

Estimating the effect of a retraining program on the re-employment rate of displaced workers

“…The main results are the following: job search assistance is relatively cheap and should be made freely available to those recommended by their case managers; quality assessment should be conducted for those wishing to join a retraining program; training should be locally based and characterized by decentralized decision-making to meet local needs more appropriately. Dar and Gill (1998), after studying eleven retraining programs in six countries, concluded that such programs are generally no more effective than job search assistance in increasing re-employment prospects. As a result, they should be targeted to those who can benefit the most from them: women and minorities (Moore, 1990), industry-switchers (Stock, 1998), laid off workers from manufacturing (Kletzer, 1998), or those with high tenure (Jacobson et al, 1993).…”

The Effect of Industrial Cluster Policy on Firm Performance in Ethiopia: Evidence from the Leather Footware Cluster

“…viii Except for the cost-benefit approach, all of the other evaluation methods only take into account the impacts of the policy measure without considering the intervention costs. However, to investigate the cost effectiveness of the cluster policy impacts the social costs and benefits or intervention costs must be considered (Dar and Gill, 1998). Theoretically, the social cost-benefit approach is an appropriate evaluation method as it makes use of both the estimated impacts and explicitly calculated intervention costs.…”

“…Different types of cluster policy evaluation methods have been used in the literature, such as: policy input-oriented methods (Aranguren et al 2006), case study evaluations (FromholdEisebith and Eisebith, 2008), input-output models (Schaffer, 1999), cost-benefit analysis (Dar and Gill 1998), and econometric models (White et al 2006). An overview of the strengths and weaknesses of these cluster policy evaluation methods are briefly discussed in Schmiedeberg (2010).In the reviews she indicated that the choice of the specific evaluation method depends on the purpose of the evaluation, the availability of data, and the scope of the cluster policy viii .…”