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

Author

Listed:
  • Barnette, Justin
  • Park, Jooyoun

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.

Suggested Citation

  • Barnette, Justin & Park, Jooyoun, 2019. "Skill and Wage Overshooting in Occupational Training with the Trade Adjustment Assistance Program," MPRA Paper 93412, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:93412
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    More about this item

    Keywords

    TAA; job training; wage replacement; ALMP;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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