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Title:Evaluating an Innovative Redundancy-Retraining Project: The Austrian Steel Foundation PDF Logo
Authors:Winter-Ebmer, Rudolf
Issue Date:2001
Series/Report no.:IZA Discussion paper series 277
Abstract:This paper evaluates an Austrian manpower training program, which is highly innovative in its content and financing – and could therefore serve as a role model for other programs. In the late 1980s privatization and down-sizing of nationalized steel firms have lead to large-scale redundancies. A special Steel Foundation was created as part of a social plan. This Foundation acted like an independent training center, where displaced workers would spend relatively long training periods (sometimes several years), obtaining personality and orientation training, as well as formal education. The last step of the integrative program was placement assistance as well as assistance for creating one?s own business. The Foundation was financed by (higher) contributions from unemployment insurance funds, by the previous firms themselves, as well as by a collectively-bargained special tax on the remaining workers in the Steel Firms. Moreover the trainees themselves would have to support the Foundation by depositing their redundancy payments. In evaluating post-foundation economic performance I use days worked and wage growth. As a control group I take all other displaced workers from the firms who formed the Foundation, using Instrumental Variables to solve the selection problem. The results show considerable wage gains – even for a period of five years after leaving the Foundation – as well as improved employment prospects. Finally, a cost-benefit analysis is performed to assess the long-term success of the Foundation.
Subjects:Labor market programs
evaluation
cost-benefit analysis
Instrumental Variables
JEL:J53
J65
J58
H43
I21
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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