Estimating the Effect of a Retraining Program for Displaced Workers on Their Transition to Permanent Jobs

27 Pages Posted: 8 Mar 2005

See all articles by Sandra Cavaco

Sandra Cavaco

University of Angers - Institute of Economic Theory and Analysis (GATE); Aarhus School of Business; University of Lyon 2

Denis Fougère

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Center for Scientific Research (CNRS); IZA Institute of Labor Economics

Julien Pouget

National Institute of Statistics and Economic Studies (INSEE); National Center for Scientific Research (CNRS); IZA Institute of Labor Economics

Date Written: March 2005

Abstract

In this paper we estimate the short-term effects of a French retraining program that was intended to improve reemployment prospects of displaced workers. Our empirical analysis uses non-experimental data collected by the French Ministry of Labour. Transitions from unemployment to permanent vs. temporary jobs are assumed to be generated by a dependent competing risks duration model. Moreover we assume that program entry but also direct transitions from the program to employment are both affected by a selectivity process depending on observable and unobservable individual heterogeneity. We find mixed evidence regarding relevance of the program. For displaced workers who join the program, program participation increases the average probability to obtain a permanent job by 8 points (passing from 42 to 50%). However, for displaced workers who do not join the program, this average probability would have been increased by 28 points (passing from 43 to 71%) had they participated in the program. We conclude that, although the program has been globally effective, it has been insufficiently proposed to the displaced workers who would have benefited the most from it.

Keywords: evaluation, re-employment program, displaced workers, unemployment duration, dependent competing risks model

JEL Classification: C41, J24, J64, J68

Suggested Citation

Cavaco, Sandra and Fougere, Denis and Pouget, Julien, Estimating the Effect of a Retraining Program for Displaced Workers on Their Transition to Permanent Jobs (March 2005). IZA Discussion Paper No. 1513. Available at SSRN: https://ssrn.com/abstract=680607

Sandra Cavaco

University of Angers - Institute of Economic Theory and Analysis (GATE) ( email )

93, chemin des Mouilles
Monnaie et Finance at Lyon
69130 Ecully cedex
France

Aarhus School of Business

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

University of Lyon 2

93 Chemin des Mouilles
69676 Bron Cedex
France

Denis Fougere (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

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France
+33 1 4117 7713 (Phone)
+33 1 4117 7634 (Fax)

National Center for Scientific Research (CNRS)

3, rue Michel-Ange
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France

IZA Institute of Labor Economics

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

Julien Pouget

National Institute of Statistics and Economic Studies (INSEE) ( email )

18, Boulevard Adolphe-Pinard
75675 Paris Cedex 14
France

National Center for Scientific Research (CNRS)

3, rue Michel-Ange
Paris cedex 16, 75794
France

IZA Institute of Labor Economics

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

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