Year Up

Year Up is a national job training program for youth between the ages of 18 and 24 who are disconnected from work and school. The program provides participants with six months of full-time training in the financial services and IT sectors followed by a six-month internship at a firm in those industries, along with support services such as counseling, instructional supports, and financial assistance in the form of a weekly stipend. The MVPF estimate is based on recent initial results from a randomized evaluation of Year Up conducted by Abt Associates beginning in 2013 Fein and Hamadyk (2018), which cover three years of impacts following the program.

MVPF SUMMARY

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Fein and Hamadyk (2018), Exhibit 6-1, document a significant decrease in treatment group earnings in the first year following random assignment (-$5,338), followed by large and significant earnings gains in the subsequent two years ($5,181 and $7,011, respectively). Discounting these impacts back to the program year at a 3 percent rate and applying a tax rate calculated from Congressional Budget Office estimates of 18.6% yields a total present-discounted after-tax earnings gain of $4,962 for participants and an increase in tax payments of $1,134. As a relatively intensive program, Year Up has a higher per-participant cost than other programs included in their sample: $28,290, including $6,614 for student stipends.

The resulting baseline MVPF for Year Up that measures willingness to pay by its impact on after tax income is \frac{4,962+6,614}{28,290-1,134}=0.43 (95% CI: [0.37, 0.48]).

Using the alternative assumption that WTP for the program is equal to the program’s cost, the MVPF is \frac{28,290}{28,290-1,134}=1.04 (95% CI: [1.03, 1.05]).

The key question for the MVPF of this program is how long earnings gains persist. For consistency with other job training programs, Hendren and Sprung-Keyser (2020) use the observed time period for the estimated length of gains, as historically even long-run evaluations of job training programs such as Job Corps have not found large effects. However, it is important to note that the short-run gains for Year Up are particularly large relative to other job training programs. Appendix Table C.I in Hendren and Sprung-Keyser (2020) shows that if one projects earnings gains for 5 additional years, the resulting MVPF is 2.78 (95% CI: [2.10, 3.59]), and if the gains hold for 18 additional years (21 total), the estimated MVPF would be infinite, that is, the program would pay for itself. In this sense, the MVPF for Year Up will be much higher if these earnings gains remain into the future. And indeed, a recent long-term follow-up by Fein et al. (2021) suggests this is the case.