Labor market policies, which include programs such as vocational training, job search aid, and wage subsidies, are of increasing importance for ensuring a productive workforce amid ongoing structural changes in the labor market. Despite this, there is limited evidence regarding their effectiveness. Workers who opt into training programs likely differ systematically from those who do not, casting doubt on the results of studies that simply compare the outcomes of workers who do and do not complete training. This study overcomes this limitation by using data on jobseekers who are quasi-randomly matched with caseworkers to assess the impacts of a particular labor market policy in Denmark — classroom training.
The authors use administrative data from Denmark covering jobseekers who lost their jobs between 2012 and 2018. Importantly, for unemployed jobseekers to receive UI benefits from the Danish government, they must meet with a caseworker at a job center to receive assistance with their job search and assignment to a training program. Jobseekers are assigned caseworkers essentially randomly (based on their day of birth), and caseworkers differ in their tendencies to assign jobseekers to different types of training programs, with some caseworkers more likely to assign jobseekers to classroom training programs and others more likely to assign jobseekers to programs that provide training on the job. The authors exploit this in their research design and compare the employment outcomes of jobseekers from the same job center and year who, due to their day of birth, receive different counseling. They find the following:
In the next part of the paper, the authors aim to uncover the mechanisms driving the effects revealed in their analysis. They find the following:
The authors conclude by exploring how these effects vary across different types of workers in order to offer insights relevant for policy:
This paper provides novel evidence for the effectiveness of classroom training for helping displaced workers regain employment. From a methodological standpoint, this study illustrates the potential pitfalls in assigning causality in studies lacking at least quasi-randomness. For policymakers, this research offers a tool for closing the employment gap among job seekers affected by offshoring.