Sectoral Job Training: Year Up
Introduction
Year Up is a year-long sectoral training program for low-income youth in which participants spend six months in a classroom learning sector-specific skills followed by six months applying those skills at an internship. The program then helps participants transition into full-time employment, frequently with the same employer from their internship.
In 2013, Year Up was evaluated with a randomized controlled trial where applicants were randomly assigned to earn a spot. As part of the experiment, participants were surveyed at baseline as well as one-, three-, and six- years post program. Narain and Noray (2023) focus on the heterogeneous impacts of Year Up and estimate the MVPF of Year Up, accounting for earnings impacts up to six-years post program.
MVPF = 6.1
Net Cost
The net cost of Year Up is estimated as the portion of the program cost paid for by the government, as well as the increased tax revenue from participants’ earnings gains.
The paper highlights that 60% of the full program cost per person of $28,290 is paid for by employers. This implies the government contribution to the program cost is 0.4*$28,290 = $11,316.
The paper estimates a cumulative earnings gain of around $32,100 in the six-years following the program, using an annual discount rate of 0.03. Assuming a tax rate of 18.6% implies $5,952 in increased tax revenue.
This leads to a net government cost of $11,316 – $5,952 = $5,364 per participant.
Willingness to Pay
The paper estimates the willingness-to-pay as the stipend participants receive and their after-tax earnings gains. Following Hendren and Sprung-Keyser (2020), the paper estimates the stipend amount as $6,614.
Assuming a tax rate of 18.6%, the paper estimates after-tax earnings gains of (1-0.186)*$32,100 = $26,048.
This leads to a total willingness-to-pay of $6,614+$26,048 = $32,744.
MVPF Summary
With a willingness-to-pay of $32,744 and a net government cost of $5,364, Narain and Noray (2023) estimate an MVPF of Year Up of 6.12.
This estimate is higher than 0.4, the MVPF estimate for Year Up from Hendren and Sprung-Keyser (2020), which was only able to include earnings effects up to three years after the program and assumed the full program cost was paid for by the government.
References
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
Narain, Namrata, Kadeem Noray (2023). “Whose Bridge to Opportunity and Why? Unpacking the Impacts of Sectoral Job Training.” Working Paper. https://www.dropbox.com/scl/fi/dvcoxvioywj37j8ujsnjl/yu_het_updated.pdf?rlkey=f0e3vkle2fzfhs28p1w7v7n0u&e=1&dl=0
Policy Features
- Category
- Education
- Sub-Category
- Job Training
- Beneficiary Type(s)
- Adults
- Average Age
- 22
- Average Income
- 27,000
- Country of Implementation
- United States
- Year of Implementation
- 2000
- Empirical Method
- RCT
- Research Type
- Primary
- Peer Reviewed
- No