The effectiveness of labour market training from the perspective of labour demand

Abstract

A recent study indicates that labour market training helps unemployed individuals find employment. In particular, those who participate in vocational training tend to become employed more successfully than those who have not received such training. Earlier studies have not found labour market training offered to the unemployed to significantly improve their employment prospects. The study by Merja Kauhanen, Reija Lilja, and Eija Savaja for the Ministry of Labour, The effectiveness of labour market training from the perspective of labour demand, shows that the benefits must be assessed over a sufficiently long time horizon. If the effects of training are evaluated shortly after its commencement, its benefits do not become apparent, as those participating in training do not, unlike non-participants, have equivalent time resources for job search.

Kauhanen, Lilja, and Savaja examine how much training increases the probability of an unemployed job seeker finding employment compared to a situation in which they had not participated in training. The analyses are based on large sample datasets drawn from the Ministry of Labour’s job seeker register, in which the situation of the same unemployed job seekers has been followed for three years or as long as they remained registered as unemployed job seekers.

The study assesses the effectiveness of labour market training in two different phases of economic growth: during favourable economic growth in 1998–2000 and during weakening economic growth in 2001–2003. During favourable economic growth, the effectiveness of labour market training is better than during weak growth, but the difference is not very large. In particular, when economic growth coincides with a low initial level of unemployment, the positive effects of labour market training increase significantly.

The timing of labour market training matters. It appears that in regions with low unemployment, training would be better placed at a later stage of unemployment. In contrast, in regions with high unemployment, delaying the start of training would not be advisable. (AI translation)

Publication Information

Kauhanen, M., Lilja, R. & Savaja, E. (2006), Työvoimapoliittisen koulutuksen vaikuttavuus kysynnän näkökulmasta, Työministeriö, Työpoliittinen tutkimus 313.

• ISSN: 1236-7176
• ISBN: 952-490-015-7
• Press Release in Finnish