Income Effects from Labor Market Training Programs in Sweden During the 80's and 90's

48 Pages Posted: 21 Oct 2002

See all articles by Thomas Andrén

Thomas Andrén

DAV Institute of Management - National Institute of Economic Research

Björn Gustafsson

University of Gothenburg - Department of Social Work; IZA Institute of Labor Economics

Date Written: October 2002

Abstract

Swedish labor market programs appear large from an international perspective, yet their consequences are not fully investigated and understood. In this paper we estimate a switching regression model with training effect modeled as a random coefficient, partitioned in an observed and unobserved component. We investigate labor market training for three cohorts during the 80s and the beginning of the 90s on its effect on earnings. We separate the analysis between Swedish-born and foreign-born individuals to identify differences in their responses to training. The results indicate that there is positive sorting into training. We find that the proportion of trainees having positive rewards from training was not very different from the proportion having negative rewards. This means that the results do not support the view that from efficiency considerations, too few persons were enrolled in labor market training during this period. Differences in results across cohorts can be interpreted as being caused by rapid changes in the labor market. Further, consistent with results from several previous studies we find that being young often means no positive pay-off from training, and the same is found for persons with only primary education. In conflict with what earlier studies have shown, we found that males have a better pay-off from training than females. Rewards from training were higher for foreign-born than for natives and rewards among the former vary by place of birth.

Keywords: Labor Market Training, Non-experimental Estimator, Positive Sorting, Unobserved Heterogeneity to Training Reward, Random Coefficient Model

JEL Classification: J31, J38

Suggested Citation

Andrén, Thomas and Gustafsson, Bjorn, Income Effects from Labor Market Training Programs in Sweden During the 80's and 90's (October 2002). Available at SSRN: https://ssrn.com/abstract=341561 or http://dx.doi.org/10.2139/ssrn.341561

Thomas Andrén (Contact Author)

DAV Institute of Management - National Institute of Economic Research ( email )

Box 3116
Stockholm, 10362
Sweden
08-45359449 (Phone)

Bjorn Gustafsson

University of Gothenburg - Department of Social Work ( email )

Göteborg
Sweden
+46 31-773-1890 (Phone)
+45 31-773-1888 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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