Increases in Local Unemployment and the Delivery of Trade Adjustment Assistance Services

Abstract

This study investigates how service delivery of employment-related federal programs administered at American Job Centers (AJCs) changes as local unemployment increases. The authors analyze the impact of such changes on labor market outcomes of program participants using data for the Trade Adjustment Assistance (TAA) participants. The authors find that the demand for TAA services increases substantially when local unemployment increases. A 5% to 10% increase in unemployment raises training enrollment through the TAA program by nearly 13 percentage points and increases participation duration by more than 9 weeks. Our results do not support the concern that a sudden rise in the demand for AJC services might deteriorate the quality of service delivery and outcomes. In fact, although increases in local unemployment are generally harmful to displaced workers, occupational training during this time is effective at reducing the size of wage loss by at least 46%, resulting in a 3.4% average increase for wage replacement rates.

Training and Labor Adjustment to Trade

“…First, by analyzing the impact of training on the employability of workers who are displaced from highly trade-exposed sectors, this study adds to the literature on the impact of trade-related assistance programs. While earlier analyses show that the program has no significant effects on earnings (Decker and Corson, 1995;D'Amico et al, 2007), more recent studies find that the training component has positive effects on participants' earnings (Park, 2009;Barnette and Park, 2016;Hyman, 2017). 6 Our results provide new, complementary evidence of the extent to which general training programs, as opposed to trade-specific training programs, impact workers who are displaced from manufacturing sectors and how their effectiveness varies with trade exposure.…”

Skill Overshooting in Job Training With the Trade Adjustment Assistance Program

“…Geography is an important factor in determining people’s labor market experiences. Barnette and Park (2017) showed that geography influenced the labor market outcomes of a TAA participant in two ways. First, the local labor market could affect the quality of service delivery at the local AJC as their workload changes.…”

“…In their large survey study, Schochet et al (2012) showed that TAA participants suffered negative impacts on both employment and earnings compared with non-TAA displaced workers, but that TAA training reduced such negative impacts compared with nontrainees. From a different perspective, Barnette and Park (2017) found that TAA training enrollment was beneficial in reducing the negative impacts of a large increase in local unemployment.…”

International trade, job training, and labor reallocation

“…Additionally, by analyzing the impact of training on the employability of workers displaced from highly trade‐exposed sectors, this study adds to the literature on the impact of trade‐related assistance programs. While earlier analyses show no significant effects of the TAA program on earnings (D'Amico et al, 2007; Decker & Corson, 1995), more recent studies find positive effects of the training component on the earnings of participants (Barnette & Park, 2016; Hyman, 2018; Park, 2012). 4 Our results provide new and complementary evidence of the extent to which general training programs, as opposed to trade‐specific training programs, impact workers displaced from manufacturing sectors and how their effectiveness varies with trade exposure 5…”