October 2011

IZA DP No. 6064: Do Dropouts Benefit from Training Programs? Korean Evidence Employing Methods for Continuous Treatments

published in: Empirical Economics, 2014, [Online First]

Failure of participants to complete training programs is pervasive in existing active labor market programs both in developed and developing countries. The proportion of dropouts in prototypical programs ranges from 10 to 50 percent of all participants. From a policy perspective, it is of interest to know if dropouts benefit from the time they spend in training since these programs require considerable resources. We shed light on this issue by estimating the average employment effects of different lengths of exposure to a program by dropouts in a Korean job training program. To do this, we employ parametric and semiparametric methods to estimate effects from continuous treatments using the generalized propensity score, under the assumption that selection into different lengths of exposure is based on a rich set of observed covariates. We find that participants who drop out later – thereby having longer exposures – exhibit higher employment probabilities one year after receiving training, and that marginal effects of additional exposure to training are initially fairly small, but increase sharply past a certain threshold of exposure. One implication of these results is that this and similar programs could benefit from providing incentives for participants to stay longer in the program.