The Job Corps program is the largest vocational education program in the United States. Established in 1964, Job Corps is administered by the U.S. Department of Labor and provides job training and other services to at-risk youth between the ages of 16 and 24 in a residential setting via a network of centers run by local public and private agencies (Schochet et al. (2008)). Hendren and Sprung-Keyser (2020) estimate an MVPF for Job Corps based primarily on two papers resulting from the National Job Corps study, a randomized control trial involving around 80,000 eligible applicants between 1994 and 1996. These two papers are Schochet (2018), which reports impacts on participants’ earnings for 21 years following the program using Social Security earnings records and IRS tax data, and the short-run cost-benefit analysis in Schochet et al. (2006).
MVPF = 0.1
Schochet et al. (2006) estimate the program costs to be $16,158. Hendren and Sprung-Keyser (2020) then use the earnings and tax series estimated in Schochet (2018) to form their primary source of fiscal externalities and willingness to pay. For the fiscal externalities, Hendren and Sprung-Keyser (2020) sum the tax liability impacts that are directly observed for years 6-20 in Schochet (2018), discounting at 3%. This yields $52. For years 1-5, Hendren and Sprung-Keyser (2020) do not observe tax and transfer revenue, so Hendren and Sprung-Keyser (2020) instead use an estimated tax rate from the Congressional Budget Office of 0.3% applied to the earnings decrease in the first 5 years, which decreases tax revenue by $0.18. Hendren and Sprung-Keyser (2020) sum this with the value of the produced output from the participants of $220, which when combined with the programmatic cost implies a net cost of $15,886.
If Hendren and Sprung-Keyser (2020) extrapolate to 65 years, it implies a net cost of $15,832. Hendren and Sprung-Keyser (2020) also consider an alternative specification that includes cost reductions from crime reduction, AFDC receipt, and spending on other forms of public assistance that are estimated in Schochet et al. (2006). Including these cost reductions implies a net cost of $12,624.
For WTP, Hendren and Sprung-Keyser (2020) construct the after-tax earnings using the same series from Schochet (2018) but subtract out the tax and transfer payments, which equal $69. To this, Hendren and Sprung-Keyser (2020) add the value of transfers provided to recipients in the program to cover their food and clothing of $2,314. Summing these inputs implies a willingness to pay of $2,383.
The net cost and WTP estimates above yield an MVPF of 0.15 (95% CI: [-0.23, 0.58]).
If one assumes the earnings impacts persist in percentage terms throughout the life cycle to age 65, it implies an MVPF of 0.18 (95% CI [-0.53, 1.06]). An alternative assumption is that Job Corps is valued at its programmatic cost. This would imply an MVPF of 1.00 (95% CI [0.96, 1.06]). And, yet another alternative assumption would include the additional cost reductions from crime, AFDC, and other public spending. This implies an MVPF of 0.180 (95% CI [-0.27, 0.81]).
Hendren, Nathaniel and Ben Sprung-Keyser (2020). “A Unified Welfare Analysis of Government Policies.” The Quarterly Journal of Economics, 135(3): 1209–1318. DOI: https://doi.org/10.1093/qje/qjaa006
Schochet, Peter Z. (2018), “National Job Corps Study: 20-Year Follow-Up Study Using Tax Data,” Mathematica Policy Research Report. https://www.dol.gov/sites/dolgov/files/OASP/legacy/files/Job-Corps-IRS-Report.pdf
Schochet, Peter Z., John A. Burghardt, Sheena M. McConnell et al. (2006), “National Job Corps Study and Longer Term Follow-up Study: Impact and Benefit-Cost Findings Using Survey and Summary Earnings Records Data,” U.S. Department of Labor, Employment and Training Administration. https://docplayer.net/234091-National-job-corps-study-and-longer-term-follow-up-study-impact-and-benefit-cost-findings-using-survey-and-summary-earnings-records-data.html
Schochet, Peter Z., John Burghardt and Sheena McConnell (2008). “Does Job Corps Work? Impact Findings from the National Job Corps Study.” The American Economic Review, 98(5), 1864-1886. DOI: https://doi.org/10.1257/aer.98.5.1864