Estimating the return to training and occupational experience: The case of female immigrants

Abstract

1 Do government provided training programs benefit the participants and the society? We address this question in the context of female immigrants who first learn the new language and then choose between working or attending government provided training. Although theoretically training may have several outcomes, most evaluations have focused on only one outcome of training: the expected wage. However, training might have no direct effect on wage, but, nevertheless, affect employment probability in higher paid jobs. In order to measure the return to government provided training, and overcome the above reservations, we formulate an estimable stochastic dynamic discrete choice model of training and employment. Given the estimated model, the individual benefit is measured by the change in expected life time utility due to the effect of alternative training policy. The social return from training is measured by the expected increase in actual earnings minus the cost, due to a couterfactual policy. Our estimates imply that training has no significant impact on the mean offered wage in blue-collar occupation, but training increases the mean offered wage in white-collar occupation by 1