The Effect of Vocational Employment Training on the Individual Transition Rate from Unemployment to Work

Abstract

SummaryThe vocational employment-training program is the most ambitious and expensive amongst the active labor market policy programs for the unemployed in Sweden. We analyze its effect on the individual transition rate from unemployment to employment using a unique set of administrative data and a novel empirical approach exploiting variations in the timing of training and exit to work. The approach involves estimating duration models, and it allows us to quantify the individual effect of training in the presence of selectivity on unobservables. The data contain the full population of unemployed in the period 1993-2000 and include multiple unemployment spells for many individuals. The results indicate a significantly positive effect on exit to work after the program. Its magnitude is very large shortly after finishing the course but it then diminishes. If we also take the time spent in the program into account, the net effect of participation in the program on the mean unemployment duration is close to zero. JEL Code: J64, J24, I28, J68.

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