Assignment Mechanisms, Selection Criteria, and the Effectiveness of Training Programs

We analyze the effectiveness of further training for unemployed under two different regulatory regimes, which are featured by different assignment mechanisms and selection criteria. The first regime is characterized by a strong influence of caseworkers, because they can assign unemployed to training courses directly. Under the new regime a voucher system is implemented. Further, new selection criteria instruct caseworkers to assign training to unemployed with high employment probabilities after training. Our results show that assignment and selection criteria do not alter the effectiveness of further training in the longrun. However, changing compositions of program types and durations under the voucher regime lead to a higher effectiveness of training in the short-run. In the medium-run, training is less effective under the voucher regime. A decomposition of the effects of the stricter selection criteria reveals interesting insights about opposing forces that cancel out each other on average.