The Limits of Mathematics and NP Estimation in ... - Chichilnisky

The Impact of Government-SponsoredTraining Programs on the Labor Market Transitions of Disadvantaged MenThe Impact of Government-Sponsored Training Programs on the Labor Market Transitions of Disadvantaged Men 2975The last section of the panel reports the implicit correlations between the origin and thedestination states. Note that the correlation matrix need not be symmetric nor does thediagonal need be equal to unity. On the other hand, the restrictions that were imposed toachieve identification of the loading parameters imply that the first row of the matrix is equalto the first row of the matrix of the middle section.For the sake of brevity we will focus our attention on the most interesting correlations. Theestimates suggest that those who are likely to have short welfare training spells are also lesslikely to transit through welfare or JRP and more likely to enter employment (row 2). Similarly,row 3 indicates that individuals who are likely to have short JRP spells are less likely to returnto either welfare or welfare training in the future, and much more likely to enter employment.Finally, those who have short UI training spells (row 5) have higher transitions rates intowelfare and welfare training, and lower transitions rates into employment.These correlations suggest there is considerable selectivity into the training programs.Furthermore, they show that those who are selected into welfare and JRP training programsappear to be different from those who participate in UI training programs. As a matter of fact,all the correlation coefficients of the last section of the panel pertaining to UI training havethe opposite sign to those of welfare and JRP training. Consider, for example, those who haveunexpectedly long UI training spells and those who have unexpectedly short welfare trainingor JRP spells. According to the last section of the panel, all these individuals are more likelyto move into employment upon exiting their respective spells than average. Yet, the middlesection indicates that only those on welfare training or JRP are likely to have long employmentspells. Those who were on UI training are more likely to have short employment spells.That those who are likely to have short JRP or welfare training spells are more likely toexperiment long employment spells may be somewhat surprising. In fact, when studying theimpact of the Youth Training Scheme in the UK, Mealli et al. (1996) and Mealli & Pudney (2003)conjectured that early program termination may result from more intensive search stemmingfrom better than average motivation. Hence, early termination may be associated with ahigher probability of transition into employment and longer employment spells. Conversely,if failure to complete the full term is a consequence of low ability and motivation, it may beassociated with poorer employment outcomes. Although we have no information regardingprogram completion, our results are consistent with the first possibility, whereas those ofMealli et al. (1996) were consistent with the second possibility.5. ConclusionThe analysis has focused on an examination of the impact of government-sponsored trainingprograms aimed at disadvantaged male youths on their labour market transitions. We haveelected to concentrate our attention on this group since they have fared relatively poorly onthe labour market over the past decade in Canada by all accounts. The richness of the dataat our disposal has allowed us to recreate very detailed individual histories over a relativelylong period. As many as seven distinct states on the labour market could be identified in thedata.This study has applied a continuous time duration model to estimate the density of durationtimes in these seven states, controlling for the endogeneity of an individual’s training status.Most previous studies have used survey or administrative data that were less amenableto the kind of analysis performed in this chapter. Depending on the nature of the data,