Do Displaced Workers Benefit from Community College Courses? Findings from Administrative Data and Directions for Future Research

Abstract

Over the past 25 years policy makers have sought to reduce the long-term losses experienced by displaced workers by substantially expanding their opportunities for retraining. Much of this retraining has taken place in the nation's community colleges. In our analysis of community college-based retraining, we define a displaced worker as any worker with three or more years of tenure who filed a valid claim for Unemployment Insurance benefits following the loss of a job. Although this definition is narrower than definitions that sometimes have been used in programs that target such workers, this group should be of special interest to policy makers, because, unlike most unemployed workers, their job losses have long-term consequences for their earnings.

To analyze the effect of community college schooling we rely on a large sample of administrative records from Washington State. Our analysis indicates that one year of community college schooling raises the earnings of male displaced workers by 7 percent and by even more for females. These estimates are consistent with those reported in the schooling literature. However, these impacts are significantly larger when displaced workers complete more quantitatively-oriented courses and significantly smaller when they complete less quantitatively-oriented courses. We also find that older displaced workers, those 35 and older, who enroll in community college-based retraining experience similar earnings gains as younger displaced workers. The net benefits from such retraining, however, are smaller for older displaced workers which is consistent with our finding that they participate in retraining at lower rates than their younger counterparts.