Income effects from labor market training programs in Sweden during the 1980s and 1990s Available to Purchase

This article estimates a control function estimator with training effect modelled as a random coefficient, partitioned into an observed and unobserved component. The article analyzes the earnings effect of participating in labor market training programs for three cohorts during the 1980s and the beginning of the 1990s. It separates the analysis between Swedish and foreign‐born to identify differences in their responses to training. The results indicate that there is positive sorting in training: slightly positive effects for both groups but somewhat larger for the foreign‐born. Further, consistent with results from several previous studies, the article finds that being young often means no positive pay‐off from training, and the same is found for persons with only a primary education. In conflict with earlier studies, the article finds that males have a better pay‐off from training than females. Rewards from training are higher for foreign‐ than for native‐born and rewards among the former vary by place of birth and how long they have been in the country.