Thursday, December 18, 2008

Workshop in Denmark

I have just returned from about 10 days in Europe. The first portion was in Denmark to attend this workshop on the (surprise!) evaluation of active labor market policies sponsored by the Aarhus Business School.

Highlights included Michael Lechner's work, which Markus Froelich and Stephanie Behnke, on Swiss caseworkers, which you can find (along with the other papers) by clicking through to the program above. Caseworkers are, to use an analogy I am really tired of but have no good substitute for, the black box of active labor market policy. I am glad to see more people studying them as I think they are interesting in their own right and also because we might learn some things that would either increase program effectiveness or decrease program costs. Plus I find the general question of professional expertise of interest. Caseworkers certainly think they are adding value, but it is not so clear in the literature that they really are.

I also quite liked Monica Costa Dias' work, with Richard Blundell and Costas Meghir, on the accumulation of human capital over the life cycle via formal schooling and learning by doing. We had a good talk afterward the presentation about whether you want to incorporate learning by doing or on-the-job training in the model. These may sound like the same thing but learning by doing assumes that human capital increases whenever you work, while on-the-job training assumes that you accumulate human capital on the job, but only during a portion of the work day set aside for the purpose. In a life cycle context, the early human capital literature shows that if human capital depreciates at some modest rate, you gradually decrease your investment in on-the-job training as you age, because the period over which you reap the returns is getting shorter. In contrast, learning by doing assumes human capital just keeps increasing with work until you retire. These two models have very different implications for wages over the working life. I think on-the-job training probably predominates but the fact is that we do not really know empirically. This is a tough (due to difficulties of measurement) topic but one well worth more attention in the literature.

The most entertaining presentation was Bart Cockx' paper evaluating an active labor market policy in Belgium. Bart got a lot of laughs from the audience (which consisted entirely of Europeans other than yours truly and one Australian) just be describing the Belgian unemployment insurance system, which includes benefits that never end. Getting Europeans to laugh at your country's unemployment insurance system is a much higher level of attainment than getting Americans or other Anglosphere types to do so. Even more laughter ensued when the dramatic policy reform evaluated in the paper was described. Basically, the new policy sends claimants a letter warning them that they will have to meet with their caseworker eight months in the future. The paper itself is quite nice.

At the top of this post is a group picture from the workshop. We toured the Jylland, an old wooden battleship kept in drydock, with a museum to the side, just next to our hotel in exotic Ebeltoft. Being one who tries to provide public goods whenever possible, I am the one in the sailor hat, which our (amazingly excellent) tour guide insisted that one of us wear.