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Does occupational training by the trade adjustment assistance program really help reemployment? Success measured as occupation matching. (Park 2012)

Citation

Park, J. (2012). Does occupational training by the trade adjustment assistance program really help reemployment? Success measured as occupation matching. Review of International Economics, 20(5), 999-1016.

Highlights

  • The study’s objective was to examine the impact of training funded by Trade Adjustment Assistance (TAA) on dislocated workers’ employment.
  • The author used a nonexperimental approach to compare the reemployment rate among TAA beneficiaries who completed a TAA-funded training program with that of those who did not complete training, and compared the reemployment rate among those who participated in each type of TAA-funded training with that of those who did not participate in any training, after adjusting for workers’ characteristics.
  • The study found that, among TAA beneficiaries, completion of a training program was associated with higher reemployment rates. The study also found that participation in TAA-funded customized training was associated with lower reemployment rates, while participation in occupational training or in on-the-job training was associated with higher reemployment rates compared with not participating in training.
  • The quality of causal evidence presented in this report is low because the author did not ensure that the groups being compared were similar before the program. This means we are not confident that the estimated effects are attributable to TAA-funded training; other factors are likely to have contributed.

Intervention Examined

Trade Adjustment Assistance (TAA)-Funded Training

Features of the Intervention

Established under the Trade Act of 1974 and amended through the Trade Adjustment Assistance Reform Act of 2002, the TAA Program was intended to provide aid to adult workers (18 and older) within an industry or group whose employment had been lost or reduced as a result of foreign trade competition. The available services included employment and case management services, job search assistance and allowances, training, relocation allowances, and some cash income supports. Eligible employees must have lost their jobs or have been notified of unemployment risk because of import competition or shifts in foreign production.

When the Department of Labor certifies that a group of workers have been laid off because of trade, workers expected to benefit from training are enrolled in occupational training and, conditional on their participation in the training, receive income support. TAA funds may support various forms of training, including classroom-based occupational instruction and on-the-job training, and may target a wide range of occupations or industries. Participants choose their training program with the guidance of TAA staff. Workers deemed unlikely to benefit from training may receive income support without participating in training.

Features of the Study

The study was based on administrative data from 143,000 dislocated workers who participated in the TAA program from 2005 to 2008. The author used a nonexperimental approach to compare the reemployment rates between TAA beneficiaries who completed a TAA-funded training program with those who did not complete training, and compared the reemployment rates between those who participated in each type of TAA-funded training (occupational, remedial, on-the-job, and customized) with those who did not participate in any training, after adjusting for workers’ characteristics. The study considered a participant reemployed if he or she had employment for at least one quarter during the three quarters following program exit.

Findings

Employment

  • The author found that TAA beneficiaries who completed any type of training program had a reemployment rate that was 4 percentage points higher on average than that of those who did not complete a training program. The author also found that TAA beneficiaries who received occupational skills training had a reemployment rate that was 5 percentage points higher and those who received on-the-job training had a reemployment rate that was 12 percentage points higher on average than that of those who did not receive training. Participation in customized training was associated with a 7 percentage point decrease in the reemployment rate compared with non-trainees.

Considerations for Interpreting the Findings

The author did not adequately account for preexisting differences between the groups’ earnings or employment history before program participation. Therefore, the estimated impacts might reflect preexisting differences between the groups rather than the true impact of the TAA-funded training program. For example, if a worker who participated in training was previously employed for a shorter amount of time than a worker who did not participate in training, this difference in prior employment history could contribute to differences in reemployment rates.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the author did not ensure that the groups were similar before the program. This means we are not confident that the estimated effects are attributable to TAA-funded training; other factors are likely to have contributed.

Reviewed by CLEAR

May 2017