Europe and Central Asia
Effects of Active Labor Market Programs on the Transition Rate from Unemployment into Regular Jobs in the Slovak RepublicLubyova and Ours (1999)
The system of active labor market policies (ALMP) in the Slovak Republic consists to a large extent of the creation of socially purposeful and publicly useful jobs and of retraining of unemployed workers. So far, the effects of these types of active labor market policies have hardly been analyzed. This paper uses a unique administrative data from 20 Slovak districts to analyze to what extent it is beneficial for unemployed workers who want a regular job to accept a temporary ALMP-job or enter a retraining program. We find that indeed it is beneficial for workers to do so.
Intervention settings: Urban.
Intervention description: Two ALMP programs providing retraining and counseling services, and wage subsidies at either socially purposeful jobs (up to 2 years) or publicly useful jobs (up to 6 months at public works-type job).
Methodology: Model the duration of unemployment and duration of stay in an ALMP program.
Sample: Adult unemployed workers.
Findings: Workers that enter ALMP have a 150% increase in the exit rate into a regular job. Benefits of retraining were only observed for socially purposeful jobs.
Benus, Brinza, Cuica, Denisova, and Kartseva (2005)
Sustainable economic growth requires an effective re-training system that would facilitate the match of labor supply to the changing due to rapid technological progress labor demand. Moreover, the expected increased openness of the Russian economy due to WTO accession is likely to affect labor demand as well and could have adverse effects on employment. The degree of effectiveness of public re-training programs under operation would largely determine the adjustment costs of trade liberalization as well as the flexibility of the economy with respect to technological changes. A part of re-training system is traditionally associated with state employment offices' programs. Despite the greater than ever interest in Russia and Romania to governmental programs in the context of the on-going public discussion on the role and size of the government, little is known, however, on the impact of state programs in the labor market, and about the effects of public re-training programs in particular.
Intervention description: Training and unemployment benefits, including a public service component, where local government and other eligible organizations propose public projects and hire ALMP participants to work on them.
Methodology: Propensity score matching, where non-participants are those who applied for training but were not selected.
Sample: Adults. Registered unemployed, having income less than 50% of minimum wage, employed 6 months of last 12 or recent graduate. 45% of sample had university degree.
Findings: Statistically significant effects on the likelihood of employment, the likelihood of being employed at least once, and on wage levels. Middle aged had biggest impacts. Retraining increases the probability of employment and decreases the wage for females. Program not beneficial for highly educated.
Fong and Lokshin (2000)
The paper models the household demand for child care and mothers' labor force participation and working hours in Romania. The model estimates the effects of the price of child care, the mother's wage, and household income on household behavior with respect to child care and mother's employment. We found that both the maternal decision to become employed and the decision to use out-of-home care are sensitive to the price of child care. A decrease in the price of care can increase the number of working mothers and thus can reduce poverty in some households. We also found that the potential market wage of the mother has a significant positive effect on the decision to purchase market care and on the decision to engage in paid employment. The level of household non-wage income has little effect on the maternal employment and on the demand for child care. In addition to facilitating the work of women, kindergartens and cre_ches appear to play an important role in providing educational and social benefits for children: close to half of the children in these facilities having mothers who do not work. Further research is needed to assess the nature and cost of these benefits, and determine the roles of the public and the private sector in the provision, finance and regulation of such services for working and non-working mothers.
Intervention settings: Urban.
Intervention description: Skill training and/or vouchers for workfare participants to give to prospective employers (18 month wage subsidy).
Methodology: Model to estimate effects of child care cost, mother's wage, and HH income on HH behavior relating to child care and mothers working outside home.
Findings: Maternal decision to take job and decision to use out-of-home care are sensitive to child care price. Decrease in child care price increases number of mothers who work (and reduce poverty in some HH). Potential market wage of mother has positive effect on decision to purchase market care and engage in paid employment. HH non-wage income little effect on maternal employment and demand for child care.
Active Labor Market Policies in Poland: Human Capital Enhancement, Stigmatization or Benefit ChurningKluve, Lehmann, Schmidt (1998)
This paper provides micro-econometric evidence on the effectiveness of Active Labor Market Policies (ALMP) in Poland. We sketch the theoretical framework of matching estimators as a substitute for randomization in labor market programs. Using retrospective data from the 18th wave of the Polish Labor Force Survey we implement a conditional difference-indifferences matching estimator of treatment effects. Treatment and control groups are matched over individual observable characteristics and pre-treatment labor market histories to minimize bias from unobserved heterogeneity. We also require that observations on controls be from the same regional labor market and from an identical phase of the transition cycle. Considering as the outcome a multinomial variable of labor market status, our first important finding suggests that training of men and women has a positive effect on the employment probability. For men public works and intervention works have negative treatment effects, while participat in in intervention works does not affect women's employment probabilities. We attribute the negative treatment effects for men to benefit churning rather than to stigmatization of intervention and public works participants.
Intervention settings: Urban
Intervention description: Three forms of training: publicly financed training and retraining, wage subsidies for workers in private or public firms, and public works. Courses lasted 2-3 months. People receive unemployment benefits during training.
Methodology: Difference-in-difference matching, where outcome is labor force status. Control group consists of people who had been registered unemployed over same time period.
Sample: Unemployed workers offered program at their local labor office.
Findings: Training/program increase average employment probability for women and men over both short and medium term. Non-training ALMP did not have a positive benefit.
Stimulating Managerial Capital in Emerging Markets: The Impact of Business and Financial Literacy for Young EntrepreneursBruhn and Zia (2013)
Identifying the determinants of entrepreneurship is an important research and policy goal, especially in emerging market economies where lack of capital and supporting infrastructure often imposes stringent constraints on business growth. This paper studies the impact of a comprehensive business and financial literacy program on firm outcomes of young entrepreneurs in an emerging post-conflict economy, Bosnia and Herzegovina. The authors conduct a randomized control trial and find that while the training program did not influence business survival, it significantly improved business practices, investments, and loan terms for surviving businesses. Entrepreneurs with higher ex-ante financial literacy further exhibited some improvements in business performance and sales.
Intervention settings: Urban
Intervention description: Business training with central theme of encouraging capital investment among young businesses. Six modules on basic business concepts, accounting skills, and business investment and growth strategies.
Sample: 445 young entrepreneurs or potentials (35% women), larger than micro stratified by baseline financial literacy level, gender, industry and baseline products. One-third of sample did not own a business but had a business exploration loan.
Findings: Program significantly improved business practices (treatment 17% more likely to implement new production processes), investments (treatment 11% more likely to inject new investment into businesses) and loan terms for surviving businesses. Entrepreneurs with higher ex-ante financial literacy exhibited some improvements in business performance and sales (sub-group showed 54% increase in profits). The training program did not influence business survival or business entry by clients with exploratory loans.