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Should we teach old dogs new tricks? the impact of community college retraining on older displaced workers

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  • Louis S. Jacobson
  • Robert J. LaLonde
  • Daniel G. Sullivan
Abstract
This paper estimates the returns to retraining for older displaced workers--those 35 or older--by estimating the impact that community college schooling has on their subsequent earnings. Our analysis relies on longitudinal administrative data covering workers who were displaced from jobs in Washington State during the first half of the 1990s and who subsequently remained attached to the state?s work force. Our database contains displaced workers' quarterly earnings records covering 14 years matched to the records of 25 of the state's community colleges. We find that older displaced workers participate in community college schooling at significantly lower rates than younger displaced workers. However, among those who participate in retraining, the per-period impact for older and younger displaced workers is similar. ; We estimate that one academic year of such schooling increases the long- term earnings by about 8 percent for older males and by about 10 percent for older females. These per-period impacts are in line with those reported in the schooling literature. These percentages do not necessarily imply that retraining older workers is a sound social investment. We find that the social internal rates of return from investments in older displaced workers' retraining are less than for younger displaced workers and likely less than those reported for schooling of children. However, our internal rate of return estimates are very sensitive to how we measure the opportunity cost of retraining. If we assume that these opportunity costs are zero, the internal rate of return from retraining older displaced workers is about 11 percent. By contrast, if we rely on our estimates of the opportunity cost of retraining, the internal rate of return may be less than 2 percent for older men and as low as 4 percent for older women.

Suggested Citation

  • Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 2003. "Should we teach old dogs new tricks? the impact of community college retraining on older displaced workers," Working Paper Series WP-03-25, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-03-25
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    3. Palameta, Boris & Zhang, Xuelin, 2006. "Participation in Adult Schooling and Its Earnings Impact in Canada," Analytical Studies Branch Research Paper Series 2006276e, Statistics Canada, Analytical Studies Branch.
    4. Stenberg, Anders & Westerlund, Olle, 2016. "Flexibility at a cost – Should governments stimulate tertiary education for adults?," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 69-86.
    5. Anders Stenberg & Olle Westerlund, 2015. "The long-term earnings consequences of general vs. specific training of the unemployed," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-26, December.
    6. Albrecht, James & van den Berg, Gerard J & Vroman, Susan, 2004. "The knowledge lift: The Swedish adult education program that aimed to eliminate low worker skill levels," Working Paper Series 2004:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Kristin F. Butcher & Kyung H. Park & Anne Morrison Piehl, 2017. "Comparing Apples to Oranges: Differences in Women’s and Men’s Incarceration and Sentencing Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 35(S1), pages 201-234.
    8. Anders Stenberg & Xavier Luna & Olle Westerlund, 2014. "Does Formal Education for Older Workers Increase Earnings? — Evidence Based on Rich Data and Long-term Follow-up," LABOUR, CEIS, vol. 28(2), pages 163-189, June.
    9. Palameta, Boris & Zhang, Xuelin, 2006. "La poursuite des etudes a l'age adulte et ses repercussions sur les gains au Canada," Direction des études analytiques : documents de recherche 2006276f, Statistics Canada, Direction des études analytiques.

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