The Effectiveness of Public Sponsored Training Revisited: The Importance of Data and Methodological Choices

Abstract

As the first, substantive contribution, this paper revisits the effectiveness of two widely used public sponsored training programs, the first one focusing on intensive occupational training and the second one on short-term activation and job entry. We use an exceptionally rich administrative data set for Germany to estimate their employment and earnings effects in the early 2000s. We employ a stratified propensity score matching approach to address dynamic selection into heterogeneous programs. As a second, methodological contribution, we carefully assess to what extent various aspects of our empirical strategy such as conditioning flexibly on employment and benefit histories, the availability of rich personal information, handling of later program participations, and further methodological and specification choices affect estimation results. Our results imply pronounced negative lock-in effects in the short run in general and positive medium-run effects on employment and earnings when job-seekers enroll after having been unemployed for some time.We find that data and specification issues can have a large effect on impact estimates.

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“…Evidence for Germany shows that evaluation results are highly sensitive to the way in which non-experimental methods take into account the unemployment experience of treatment and comparison group units [11]. Failure to align treatment and comparison group units in their unemployment experience prior to the program start, results in impact estimates that are biased downward by a substantial amount [11].…”

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