IZA DP No. 3979: Cream-Skimmer or Underdog? Labor Type Selectivity, Pre-Program Wage, and Rural Labor Training Program Outcome
The mismatch between laborer's abilities and the target subject of the training program is one of the most primary concerns for a labor training program. The ability of different workers may significantly affect the outcomes of a labor training program. The objective of this paper is to look at the incentive of labor to enter the program using data of a pilot study at Zhejiang province in China. This paper shows that the average distance of a training center in a village, and the active labor proportion in a family are the core instruments that influence participation of laborers in the rural labor training program. It suggests that rural laborers enter the training program due to the availability of abundant labor in a family, and the convenient conveyance cost to the training center. The "Ashenfelter's dip," a pre-program wage drop, on the other hand may induce workers of higher caliber to enter the training program and cause the "cream-skimming" effect to training program. The traditional view of "opportunity cost" to enter a training program is extended by the result of cream skimming and training and can be used in revising the future design of rural labor training program. Putting the cream-skimming effect and the training issues together, a better accountability and governance of the training program which actively takes into account of rural laborer needs may be called for.