The Workforce Investment Act: Implementation Experiences and Evaluation Findings

13 - A Nonexperimental Evaluation of WIA Programs

371 13 A Nonexperimental Evaluation of WIA Programs Carolyn J. Heinrich LaFollette School of Public Affairs, University of Wisconsin Peter R. Mueser University of Missouri, IMPAQ International, LLC, and IZA Kenneth R. Troske University of Kentucky and IZA Kyung-Seong Jeon University of Missouri Daver C. Kahvecioglu IMPAQ International, LLC The recent economic recession has highlighted and exacerbated difficulties faced by low-wage workers in recent decades. Perhaps most troubling is a significant and persistent rise in the rate of long-term unemployment —workers unemployed for more than six months. The 2009 American Recovery and Reinvestment Act includes an unprecedented level of funding for the public workforce development system and associated employment and training programs.1 This injection of resources to aid unemployed and underemployed workers nearly doubled U.S. federal government funding for WIA programs—youth employment, adult job training, dislocated worker assistance, Job Corps, and other national activities—that had been steadily declining since the start of the WIA program in 2000 (Frank and Minoff 2005). Since its inception, there has been no rigorous evaluation of the WIA programs that serve adults. In the face of this substantially expanded public investment in employment and training, we argue that 372 Heinrich et al. rigorous evidence on the impact and effectiveness of WIA services is needed now to guide the use of these resources in generating the greatest potential benefit for workers and the highest possible return to taxpayer dollars.2 WIA is distinguished from its predecessor, JTPA, primarily by the introduction of a One-Stop service delivery system designed to improve coordination and integration of services, its use of ITAs in training services , and changes in governance structures at the state and local levels. Prior to the start of the recession in December 2007, WIA had reduced the share of low-income individuals served by one-third and decreased the length of time spent in training and the expenditures per trainee (Osterman 2007). Thus, important changes in both investments in and the implementation of public employment training programs have taken place under WIA, and yet surprisingly little is known about the impact of WIA and its components on labor market outcomes. To date, evaluations of WIA have provided very limited information on program effectiveness.3 This study employs nonexperimental matching methods to evaluate the WIA Adult and Dislocated Worker programs using data from 12 states that cover approximately 160,000 WIA participants and nearly 3 million comparison group members. Within each state, we compareWIAprogram participants with a matched comparison population of individuals who have not participated in the WIA program but who are observationally equivalent across a range of demographic characteristics, prior participation in employment programs , and labor market experiences. Comparison group members are drawn from those who have participated in the ES under WagnerPeyser legislation or who have filed claims for UI benefits. This study adds to an expanding literature that evaluates active labor market programs. In general, this literature is moderately supportive of the benefits of job training and related active labor market programs on participants. Card et al. (2009) observe that job training programs, especially longer-duration programs, tend to have very small or negative impacts on employment measures in periods of less than a year, presumably reflecting “lock-in” effects, but have positive effects in the second or third years (see also Dyke et al. [2006]; Hotz, Imbens, and Klerman [2006]). One useful benchmark is the random assignment evaluation of JTPA program participation in the late 1980s. Program enrollees experienced minimal incremental effects in the two quarters A Nonexperimental Evaluation of WIA Programs 373 after random assignment (which took place at program entry), but the increment in quarterly earnings increased to $300–$350 (2006 $) by the tenth quarter (Orr et al. 1996, p. 107). Our results indicate that the average participant in the WIA Adult program obtains a several-hundred-dollar increase in quarterly earnings. Adult program participants who obtain training have lower earnings in the months during training and the year after exit than those who do not receive training, but they catch up within 10 quarters, ultimately registering large gains. The marginal benefits of training exceed, on average, $400 in earnings each quarter three years after program entry. Dislocated workers experience several quarters for which earnings are depressed relative to comparison group workers after entering WIA, and although their earnings ultimately match or overtake the comparison group, the benefits they obtain...