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Training: A Targeted Policy Proposal - page 15 / 23





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in human capital, particularly deficits in noncognitive ability. The Cuhna et al. results point out the importance of targeting limited job training dollars toward those who are likely to experience the greatest return. This is most likely individuals who are experiencing temporary difficulties in the labor market, but who have shown a strong attachment to the labor market, thereby demonstrating strong noncognitive abilities.


A Training Proposal9

We would provide flexible training resources for workers with belowbasic levels of skills but demonstrated labor market attachment such as a stable work history. Workers in jobs that do not require skills are not likely to receive onthejob training, but the evidence of the ability to hold a job implies the presence of noncognitive abilities and social skills. This in turn suggests that a person is likely to be “trainable” and could move up the job ladder once they gain basic quantitative and literacy skills.

Research examining the effectiveness of individual training accounts (ITA) that are part of WIA shows that vouchers are an effective way to provide training support, particularly when combined with some job counseling support and a list of approved training providers (McConnell et al., 2006). Our plan would adopt a similar structure.

We would provide an annual training benefit of $2,000 for two years delivered as an individual training account as in the current WIA model for a total of $4,000. This would be a onetime benefit for an individual (once per lifetime). The funds in the account could be used for approved local training providers (often community colleges). This amount compares to the $2,713 average annual tuition and fees at a community college in 20102011 (from the American Association of Community Colleges 2011 Fact Sheet); participants in this program would typically continue to work at least parttime while taking up training, meaning that

9 This proposal was originally developed in the U.S. Treasury office of economic policy in earlytomid 2007 (at which Swagel was Assistant Secretary from December 2006 to January 2009). Linda Huffman and John Worth played key roles in developing the policy proposal and much of the discussion in this section especially reflects their work (as well as in the overall proposal). The proposal was not acted upon—not surprisingly, the subsequent events of the financial crisis from August 2007 engaged full attention at the Treasury Department.


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