Skill and Wage Overshooting in Occupational Training with the Trade Adjustment Assistance Program

Justin Barnette and Jooyoun Park

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the training choices made by workers entering the Trade Adjustment Assistance (TAA) program. This is important as more workers enter these types of programs due to technological change and globalization. We show that workers that choose a training occupation beyond their skill level (skill overshooting) or previous wage level (wage overshooting) achieve higher earnings and wage replacement rates with the cost being that it lowers their reemployment rates. Specifically, skill overshooting lowers the reemployment rates for these workers by 2.0 to 3.2 percentage points, but they enjoy an increase in their earnings by 2.0 - 2.2 percent. Wage overshooting leads to a similar decline in the reemployment rate (2.2 percentage points) but shows a much larger increase in their earnings (6.9 to 8.5%). The findings are robust to various subsamples.

Keywords: TAA; job training; wage replacement; ALMP (search for similar items in EconPapers)
JEL-codes: F16 J08 J68 (search for similar items in EconPapers)
Date: 2019-04-18
New Economics Papers: this item is included in nep-int and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93412

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