Working Paper: CEPR ID: DP2776
Authors: Rudolf Winterebmer
Abstract: This Paper evaluates an Austrian manpower training programme, which is highly innovative in its content and financing - and could therefore serve as a role model for other programmes. In the late 1980s privatization and downsizing of nationalized steel firms have led to large-scale redundancies. A special Steel Foundation was created as part of a social plan. This Foundation acted like an independent training centre, where displaced workers would spend relatively long training periods (sometimes several years), obtaining personality and orientation training, as well as formal education. The last step of the integrative program was placement assistance as well as assistance for creating one?s own business. The Foundation was financed by (higher) contributions from unemployment insurance funds, by the previous firms themselves, as well as by a collectively-bargained special tax on the remaining workers in the Steel Firms. Moreover the trainees themselves would have to support the Foundation by depositing their redundancy payments. In evaluating post-foundation economic performance I use days worked and wage growth. As a control group I take all other displaced workers from the firms who formed the Foundation, using Instrumental Variables to solve the selection problem. The results show considerable wage gains - even for a period of five years after leaving the Foundation - as well as improved employment prospects. Finally, a cost-benefit analysis is performed to assess the long-term success of the Foundation.
Keywords: cost-benefit analysis; evaluation; instrumental variables; labour market programmes
JEL Codes: H43; I21; J53; J58; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Participation in the retraining program (M53) | Higher wages (J39) |
| Participation in the retraining program (M53) | Improved employment prospects (J68) |
| Participation in the retraining program (M53) | Trainees work 45 to 80 days more per year (J24) |