Evaluating an Innovative Redundancy-Retraining Project: The Austrian Steel Foundation

41 Pages Posted: 23 Apr 2001

See all articles by Rudolf Winter-Ebmer

Rudolf Winter-Ebmer

Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

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Date Written: March 2001

Abstract

This paper evaluates an Austrian manpower training program, which is highly innovative in its content and financing - and could therefore serve as a role model for other programs. In the late 1980s privatization and down-sizing of nationalized steel firms have lead to large-scale redundancies. A special Steel Foundation was created as part of a social plan. This Foundation acted like an independent training center, 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: Labor Market Programs, Evaluation, Cost-Benefit Analysis, Instrumental Variables

JEL Classification: H43, I21, J53, J65, J58

Suggested Citation

Winter-Ebmer, Rudolf, Evaluating an Innovative Redundancy-Retraining Project: The Austrian Steel Foundation (March 2001). Available at SSRN: https://ssrn.com/abstract=267215 or http://dx.doi.org/10.2139/ssrn.267215

Rudolf Winter-Ebmer (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

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HOME PAGE: http://www.econ.jku.at/winter

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

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