Job Training Subsidies, Reemployment and Earnings in the Trade Adjustment Assistance Program

Average job training subsidies in the Trade Adjustment Assistance Program vary by state due to the cost of particular training programs chosen by participants. This study partitions the higher and lower subsidy states from 2010 to 2014 and estimates differences in the effectiveness of their average subsidy levels on reemployment and subsequent earnings. The rationale for partitioning is that higher cost programs tend to be more occupation or skill oriented than lower cost programs and might, therefore, be more effective. There is found to be only a small increase in the rate of reemployment with increases in the subsidy across all states, though it is fractionally higher in the higher subsidy partition. The contemporaneous state-level macroeconomic conditions have virtually no effect on the rate of reemployment. There is also a small increase in subsequent earnings as the subsidy increases, but only in the lower subsidy partition. Increases in earnings across all states are attributed to the state-level macroeconomic conditions, particularly inflation. These findings emerge from a different empirical approach than taken in earlier studies, but corroborate that the program's job training requirement has been only moderately effective overall, though better at promoting reemployment than higher earnings.