The Impact of Community College Retraining on Older Displaced Workers: Should We Teach Old Dogs New Tricks?

Abstract

The authors estimate the returns to retraining for older displaced workersthose 35 or older-by estimating the impact of community college schooling on earnings. The analysis relies on longitudinal administrative records covering workers displaced from jobs in Washington State during the early 1990s. The authors find that older displaced workers participated in community college schooling at lower rates than younger workers. Among those who participated, however, the impact on quarterly earnings was similar across the two age groups.One academic year of community college schooling is estimated to have increased long-term earnings by about 7% for older men and by about 10% for older women. Although these percentages are consistent with those reported in the schooling literature, estimates of the social internal rates of return from this retraining may differ substantially among older and younger workers because of differences in their work lives and their opportunity costs of retraining. uring the past decade there has been uring rising interest in policies that foster human capital investment in young chil-dren.' Proponents of these policies point to evidence that such investments produce impressive returns, even though much of the social benefit is not apparent until adolescence or young adulthood. Even as this evidence has been accumulating, policymakers have directed more of their work force development expenditures toward

Flexibility at a cost – Should governments stimulate tertiary education for adults?

“…18 With access to information on both wages and earnings, Jacobson et al (2005aJacobson et al ( , 2005b report for their sample of laid-off workers that two-thirds of the earnings returns reflect hours worked and one-third consist of increased wages. As a reference, in his survey of the returns to school litera- 17 The number of children at home is about .10 higher among the comparisons, but the incidence of children 0-to 3-years-old is higher among those treated in both 2000 and 2005 (significant at a ten percent level).…”

“…For education among older individuals, Jacobson, Lalonde and Sullivan (2003, 2005a, 2005b study workers aged 25 to 59 who were laid-off between 1990 and 1994 in Washington State, 15 percent of whom registered at community colleges. Individual fixed effects estimates of quarterly earnings from 1987 to 2000 indicate that a year of studies increased earnings by 7 to 9 percent for males and by 10 to 13 percent for females.…”

Can adult education delay retirement from the labour market?

“…In addition, extending the earlier versions of the human capital model to include factors like changes in information, relative wages, preferences, health and/or borrowing constraints (Altonji, 1993, Iwahashi, 2004, Killingsworth, 1982, Monks, 1998, Sjögren and Sällström, 2004, Wallace and Ihnen, 1975, Weiss, 1971, it is possible that the returns to education do not fall monotonically with age and that the optimal timing of substantial investments in education will occur at a fairly late stage in the life cycle. Several empirical studies have found that the earnings returns of education among individuals above age 40 are comparable to those of younger age groups (Jacobson et al, 2005a, 2005b, Stenberg and Westerlund, 2008). 2 However, increased earnings have theoretically ambiguous implications for the timing of retirement.…”

“…This argument, however, requires that the consumption of education entails large amounts of AE because the results are robust to definitions of treatment that correspond to a year of full-time study measured in terms of course registrations. The "consumption of AE" argument is also contradicted by the positive earnings effects of AE reported in Stenberg and Westerlund (2008) and Stenberg (2009) as well as those reported using US data in Jacobson (2005b). A different interpretation would be that a positive earnings effect generates an income effect that increases the demand for leisure, potentially counterbalancing a positive effect on labour supply.…”

Tax Preferences for Higher Education and Adult College Enrollment

“…They also find that the return to non-degree community college coursework is 8 to 10% higher for men with an enrollment gap. Jacobson, LaLonde, and Sullivan (2005) estimate the wage effects of community college enrollment using administrative data on displaced workers from the state of Washington. They find similar returns to a year of community college retraining for younger and older displaced workers, estimating a 7% increase in the long-term earnings of older men and a 10% increase for older women.…”