Should We Teach Old Dogs New Tricks? The Impact of Community College Retraining on Older Displaced Workers

92 Pages Posted: 11 Feb 2004

See all articles by Louis Jacobson

Louis Jacobson

Westat

Robert LaLonde

University of Chicago, Harris School of Public Policy (deceased); National Bureau of Economic Research (NBER) (deceased); IZA Institute of Labor Economics (deceased)

Daniel G. Sullivan

Federal Reserve Bank of Chicago

Date Written: December 2003

Abstract

This paper estimates the returns to retraining for older displaced workers--those 35 or older--by estimating the impact that community college schooling has on their subsequent earnings. Our analysis relies on longitudinal administrative data covering workers who were displaced from jobs in Washington State during the first half of the 1990s and who subsequently remained attached to the state's work force. Our database contains displaced workers' quarterly earnings records covering 14 years matched to the records of 25 of the state's community colleges. We find that older displaced workers participate in community college schooling at significantly lower rates than younger displaced workers. However, among those who participate in retraining, the per-period impact for older and younger displaced workers is similar. We estimate that one academic year of such schooling increases the long-term earnings by about 8 percent for older males and by about 10 percent for older females. These per-period impacts are in line with those reported in the schooling literature. These percentages do not necessarily imply that retraining older workers is a sound social investment. We find that the social internal rates of return from investments in older displaced workers' retraining are less than for younger displaced workers and likely less than those reported for schooling of children. However, our internal rate of return estimates are very sensitive to how we measure the opportunity cost of retraining. If we assume that these opportunity costs are zero, the internal rate of return from retraining older displaced workers is about 11 percent. By contrast, if we rely on our estimates of the opportunity cost of retraining, the internal rate of return may be less than 2 percent for older men and as low as 4 percent for older women.

Suggested Citation

Jacobson, Louis and LaLonde, Robert J. and Sullivan, Daniel G., Should We Teach Old Dogs New Tricks? The Impact of Community College Retraining on Older Displaced Workers (December 2003). Available at SSRN: https://ssrn.com/abstract=484482 or http://dx.doi.org/10.2139/ssrn.484482

Louis Jacobson (Contact Author)

Westat ( email )

1650 Research Blvd.
Rockville, MD 20850
United States

Robert J. LaLonde

University of Chicago, Harris School of Public Policy (deceased)

National Bureau of Economic Research (NBER) (deceased)

IZA Institute of Labor Economics (deceased)

Daniel G. Sullivan

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

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