This document discusses alternative evaluation designs for employment and training programs, including counterfactual designs that compare outcomes with and without the program. It also discusses conducting cost-benefit analyses from both the participant and non-participant perspectives, and some of the conceptual issues that arise, such as how to account for non-pecuniary benefits, job-required expenditures, and effects on taxpayers and displaced workers. Prediction parameters like the discounting time horizon and decay rate must also be considered when extrapolating long-term impacts of employment and training programs.
This document discusses alternative evaluation designs for employment and training programs, including counterfactual designs that compare outcomes with and without the program. It also discusses conducting cost-benefit analyses from both the participant and non-participant perspectives, and some of the conceptual issues that arise, such as how to account for non-pecuniary benefits, job-required expenditures, and effects on taxpayers and displaced workers. Prediction parameters like the discounting time horizon and decay rate must also be considered when extrapolating long-term impacts of employment and training programs.
This document discusses alternative evaluation designs for employment and training programs, including counterfactual designs that compare outcomes with and without the program. It also discusses conducting cost-benefit analyses from both the participant and non-participant perspectives, and some of the conceptual issues that arise, such as how to account for non-pecuniary benefits, job-required expenditures, and effects on taxpayers and displaced workers. Prediction parameters like the discounting time horizon and decay rate must also be considered when extrapolating long-term impacts of employment and training programs.
This document discusses alternative evaluation designs for employment and training programs, including counterfactual designs that compare outcomes with and without the program. It also discusses conducting cost-benefit analyses from both the participant and non-participant perspectives, and some of the conceptual issues that arise, such as how to account for non-pecuniary benefits, job-required expenditures, and effects on taxpayers and displaced workers. Prediction parameters like the discounting time horizon and decay rate must also be considered when extrapolating long-term impacts of employment and training programs.
- Counterfactual o Program of policy that is compared to the situation that would exist without the program o Impacts are measured as differences in outcome o E.g. health status or earnings - Internal Validity o Measured difference can be appropriately attributed to the program being evaluated o Depends on the comparison between the program and the situation without the program is made - Evaluation design o Specific scheme used for making comparisons in order to measure impacts
Employment and Training (E&T) Programs
- Viewed as investments in human capital (i.e., attempts to improve skills and abilities) - Major economic rationale for funding: E&T programs help correct market or institutional failures that cause underinvestment in human capital - Help correct imperfect information among participants about human capital investment opportunities by guiding them into activities that yield the highest pay-off for them - Widely accepted value = it is better to receive income from employment than from transfer programs - Advantages: o Readily understandable to policy makers o By displaying benefits and costs from the perspectives of both participants and non-participants, it suggests some of distributional implications of programs being evaluated o Measures each cost-benefit component listed can be obtained from data collected during evaluation o Operationally feasible - Difficult to find practical alternatives - Two groups relevant in assessing E&T programs: o Participants or clients served by evaluated program o Non participants, including taxpayers who pay for the program
Conceptual Issues in Conducting CBAs of E&T Programs
- The Participant Perspective o Two alternative measures Standard E&T framework estimates participant net benefits as net changes in incomes of program clients. However, the conceptually appropriate measure of participant net benefits is net changes in surplus of program participants, not net changes in incomes. Two measure diverge depends on precise mechanism o Non-pecuniary benefits from employment Suggests that there are benefits from being employed Scarring effects Results from deterioration of human capital during periods non-employment and employer reactions to gas in employment, are avoided by maintaining employment o Job-Required Expenditures Traditionally used in CBA of E&T programs count increases in job-related expenditures (e.g. child care and transportation) result from program participation as social cost of program – this approach can sometimes result in double-counting - Non-participants’ Perspective o Intangible Benefits Received by Non-participants Measuring benefits and costs of E&T programs to its participants is changing surplus that should be estimated rather than changes in their money income Effects on participant surplus of E&T-induced reductions in participant leisure time should be take into account o Changes in Taxpayer Excess Burden Taxes result in losses of economic efficiency, or deadweight loss. Particular E&T program could cause taxes to increase or decrease, depending whether program have positive or negative net expenditures by the government o Benefits from In-Program Output It is infeasible to determine what taxpayers would be willing to pay for an output. So, an alternative approach is used that determines what labor resources required to produce the output would have cost if purchased on the open market. Researchers will used appropriate wage rate but this estimate can cause overestimation or underestimation than the true value. o Possible Reduction in Crime If E&T program increases, it may also decrease criminal activities o Costs from Public-Sector Labor Displacement If the displaced workers have a similar risk of joblessness as E&T participants, then increases in output produced by E&T participants assigned to public-sector agencies may be entirely offset by losses in the output formerly produced by those workers who are displaced. This need not be the case, however, if the E&T participants are exceptional in terms of lack of skills or if they face exceptional barriers to labor market access. Thus, to the extent that E&T participants are unskilled relative to those they replaced, the labor market consequences will differ from a simple one-for-one replacement. o Costs from Private-Sector Labor Displacement CBA usually assumes that full employment is maintained. If it is, then it should be relatively easy for displaced non-participants to find alternative job opportunities (although this may take some time), and E&T programs will raise the feasible employment level. Prediction Parameters - The discounting time horizon o Total period over which benefit and cost streams are either observed or predicted - The decay rate o Necessary in extrapolating E&T effects that persist beyond the period over which post-program data on outcomes are collected in order to take account of the possibility that size of effects may change over time