Working Paper: NBER ID: w4428
Authors: James Heckman
Abstract: The Clinton administration has made job training and skill upgrading a major priority. Secretary of Labor Robert Reich has already presented a bold program for skill enhancement drawing on a new consensus in certain circles of the social science and policy communities about the need to upgrade the nation's skills. An apparently new approach to training and education has been proposed and Secretary Reich is now busy selling it to the Congress and the Nation. This paper provides background on the problems in the labor market that motivate the new Clinton-Reich initiatives on training and schooling. It briefly summarizes the proposed strategies and the background philosophy for the Clinton-Reich agenda. It then considers the evidence that supports or contradicts assumptions of their plan. There is a lot of evidence about many of the 'new' proposals because some are reworked versions of old programs that have been carefully evaluated. Other proposals borrow ideas from Germany. I compare the rhetoric that accompanies these proposals in the context of the U.S. labor market. Still other proposals have been evaluated in demonstration projects but the lessons from these evaluations have not yet influenced administration thinking. This is unfortunate because many current plans are based on assumptions that have been discredited in careful empirical studies. This research has not yet caught the attention of the policy makers in Washington.
Keywords: job training; human capital; labor market; Clinton administration
JEL Codes: J24; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Declining real income of male high school graduates and dropouts (F66) | Inadequate job training programs (J68) |
| Inadequate job training programs (J68) | Reduced earnings of male high school graduates and dropouts (J79) |
| Investments in job training (J24) | Expected returns over time (G17) |
| Substantial investment (estimated at $284 billion) (H54) | Restoration of male high school dropouts to 1979 wage levels (I26) |
| Lack of effective training (J24) | Increased joblessness and longer unemployment spells among less skilled workers (F66) |