The promise of worker training: New insights into the effects of government funded training programs

Using data on worker training programs in South Dakota over the years 2002 – 11, this study estimates the employment and earnings effects of occupational skills training and on-the-job training. Average treatment effects for the first and third calendar quarters after training are reported by: gender, worker type, demographic group, region of residence, and time period of job loss. Both occupational skills training and on-the-job training effectively increased the employment rates and incomes of participants. The effectiveness of occupational skills training tended to grow as time passed, but the effectiveness of on-the-job training tended to fade over time. Three calendar quarters after leaving training, the effects of occupational skills training were generally higher than they were after only one quarter. In contrast, three calendar quarters after training, on-the-job treatment effects tended to be smaller than after one quarter. On-the-job training had large impacts on employment but disproportionately small impacts on earnings. The employment effects of on-the-job training were typically 2 to 3 times larger than the employment effects of occupational skills training. But when considering earnings effects, the impacts of occupational skills training were often larger than those of on-the-job training. Training was generally more effective for men than women in the period immediately following training, but after three calendar quarters the effects of training were typically larger for women than for men. The short- and longer-run effects of training were greater for the non-dislocated jobless than for displaced workers. The demographic results showed that Native Americans benefited more from training than did any other demographic groups. From a regional perspective, training effectively increased employment rates and incomes for both rural and urban areas, with the impacts being slightly larger for rural areas than for urban. Finally, training was less effective in the wake of the 2007 – 09 recession than beforehand. Training had no significant employment effects and only modest income effects following the Great Recession. The results reported in this study suggest that occupational skills training and on-the-job training effectively increased employment rates and quarterly earnings across numerous sub-populations, regions, and time periods. The findings of this study will help guide policy makers going forward so that they might maximize the potential impacts of worker training programs