PPA786: Urban Policy
Class 19:
Human Capital Programs to
Promote Community Development
PPA786, Class 19: Human Capital Programs
• Class Outline
▫ Person or Place?
▫ In School or Out of School?
▫ Employment and training programs for youth
▫ Employment and training programs for adults
PPA786, Class 19: Human Capital Programs
• Person or Place?
▫ The most central question in community
development is whether to focus on people or
places.
▫ Person-based policies focusing on giving skills and
opportunities to disadvantaged people.
▫ Place-based policies focus on boosting
neighborhoods in which disadvantaged people
live.
PPA786, Class 19: Human Capital Programs
• Person or Place?—Continued
▫ These two strategies are not mutually exclusive,
but people disagree on which one should be
emphasized.
▫ Although the match is not exact, person-based
policies tend to be human-capital policies, which
are the focus of this class.
▫ And place-based policies tend to be financialcapital policies, which are the focus of the next
class.
PPA786, Class 19: Human Capital Programs
• In School or Out of School?
▫ In the case of human capital policies, another question
is whether to focus on programs in schools or out of
schools.
▫ The boundary here is not exact, either, as some pre-K
programs are not in-school and some drop-outprevention programs include out-of-school elements.
▫ This class will mention some in-school programs in
passing, but the focus is on out-of-school programs.
 You need to take education policy to cover programs
operated in schools.
PPA786, Class 19: Human Capital Programs
• In-School Programs
▫ Although we are not going to review in-school
programs, a couple findings from the research on
these programs are worth mentioning:
 Programs that look good on a small scale (often as
demonstration projects) may not look good on a large
scale (especially with random assignment).
 The most effective programs (pre-K, elementary classsize reduction) catch children early in life.
 But some recent studies (on small high school and on
dropout prevention) indicate that some programs might
be effective for teenagers.
PPA786, Class 19: Human Capital Programs
• Employment and Training Programs for Youth
▫ Some Cautions
▫ Jobs Corp
▫ ChalleNGe
▫ Youth Opportunities Program
PPA786, Class 19: Human Capital Programs
• Some Cautions (Heinrich and Holzer)
▫ It is difficult to generalize results from a specific
program evaluation to the universe of programs of the
same type (given heterogeneity in implementation),
▫ or to rigorously identify which elements of a particular
intervention are contributing to observed outcomes or
impacts
▫ Effects often do not persist. Youth my not be not fully
engaging in and participating in these programs long
enough because the interventions do not offer what
they need or want, or because of lack of motivation or
other individual barriers to participation.
PPA786, Class 19: Human Capital Programs
• Some Cautions, Example (Heinrich and Holzer)
▫ The early (1990s) success of the San Jose, California Center for
Employment Training (CET) in generating statistically significant
and unprecedented earnings impacts over 30- and 60-month
follow-up periods (totaling $2,062 per enrollee in the first 30
months and subsequently averaging close to $100 per month) led
to a 12-site, U.S. DOL-funded replication and experimental
evaluation of the program’s impacts (Miller et al. 2005).
▫ The core CET feature was the opportunity to participate in
employment and training services that mirrored the workplace
(occupational, basic skills, full-time and competency-based on an
open-entry, open-exit basis), with the close involvement of
industry in both program design and operation.
▫ The final 12-site evaluation report presented disappointing
findings, however: aggregating across all sites, the program had
no effect on youths’ employment and earnings.
PPA786, Class 19: Human Capital Programs
• Another Caution
▫ Another big issue comes up even with random
assignment designs: The program may simply
shift participants to the top of the queue.
▫ An amazing experiment randomly varied the share
of job seekers receiving (randomly assigned)
assistance across 235 French cities.
▫ Crépon, et al., “Do Labor Market Policies Have
Displacement Effects,”
http://economics.mit.edu/files/8514
PPA786, Class 19: Human Capital Programs
• Another Caution, 2
▫ “After eight months, eligible, unemployed youths who
were assigned to the program were significantly more
likely to have found a stable job than those who were
not.
▫ But these gains are transitory, and they appear to have
come partly at the expense of eligible workers who did
not benefit from the program, particularly in labor
markets where they compete mainly with other
educated workers, and in weak labor markets.
▫ Overall, the program seems to have had very little net
benefits.”
PPA786, Class 19: Human Capital Programs
• Jobs Corps (Heinrich and Holzer)
▫ Job Corps is the largest publicly-funded program providing
academic and vocational education and training to economically
disadvantaged out-of-school youth, serving approximately
60,000 new participants each year at a per participant cost of
approximately $24,000 (=$1.5 billion total).
▫ The most recent experimental evaluation involving over 15,000
youth in 1994-1995 and using four years of survey data and nine
years of administrative records on earnings (after Job Corps
exits), showed that Job Corps was successful in substantially
increasing education and training among participants, with the
impact equal to approximately one high school year and reflected
in significant increases in receipt of GED and vocational
certificates (21 and 31 percentage points, respectively).
▫ In addition, these analyses showed larger, statistically significant
earnings impacts for older youth ages 20-24 (vs. those 16-19) .
PPA786, Class 19: Human Capital Programs
• Jobs Corps (Heinrich and Holzer)
▫ One might view many of the above reported Job
Corps impacts as encouraging, although a
corresponding cost-benefit analysis suggested that
the benefits of the program faded out after four
years, so that program costs exceeded benefits for
the full evaluation sample.
▫ Still, the benefits did exceed costs for the most
engaged participants (older youth), and the
earnings impacts of this subgroup persisted
longer.
PPA786, Class 19: Human Capital Programs
• Jobs Corps (Schochet, et al., AER, 2008)
TABLE 2-IMPACTS ON KEY EDUCATIONAL OUTCOMES
Estimated impact
Treatment Control
per eligible
group
group
applicant
Percentage ever enrolled in an education or training
92.5
program during the 48 months after random assignment
Average hours ever in education or training
1,559.8
Degrees, diplomas, and certificates received
(percentage)
GED certificatec
41.6
High school diplomac
5.3
37.5
Vocational, technical. or trade certificate
1.3
College degree (two- or four-year)
Sample size
6,828
Estimated impact
per participant
71.7
20.8* (0.7)
28.9* (1.0)
848.2
711.6* (23.5)
989.0* (31.8)
26.6
7.5
15.2
1.5
4,485
15.0*
-2.2*
22.3*
-0.2
(1.0)
(0.5)
(0.9)
(0.2)
11,313
20.9*
-3.1*
30.9*
-0.3
(1.4)
(0.7)
(1.2)
(0.3)
PPA786, Class 19: Human Capital Programs
• Jobs Corps (Schochet, et al., AER, 2008)
TABLE 3-HOURLY WAGES, fRINGE BENEFITS, AND OCCUPATIONS IN THE MOST RECENT JOB IN QuARTER
Outcome measure from survey data
Percent employed in quarter 16
Hourly wage (in 1995 dollars)"· b
$5.15 (federal minimum wage in 1999) or less
$5.16 to $7.50
More than $7.50
(Average wage)
Benefits available (percentage)"
Health insurance
Paid vacation
Retirement or pension benefits
Occupation (percentage)"· b
Service
Sales
Construction
Private household
Clerical
Mechanics/machinists
Agriculture/forestry
Other
Sample size
16
Treatment group
Control group
Difference•
71.1
68.7
13.3
43.0
43.7
7.55
14.3
46.6
39.0
7.33
2.4* (0.9)
0.001*
-1.1
-3.6
4.6
0.22* (0.08)
57.4
62.9
48.3
54.3
60.7
43.7
21.3
9.7
20.9
6.9
11.8
13.9
2.6
12.9
20.8
12.1
20.3
7.2
12.8
13.1
2.6
11.1
6,828
4,485
3.0* (1.2)
2.2* (1.1)
4.6* (1.2)
0.030*
0.4
-2.3
0.5
-0.2
-1.0
0.7
0.0
1.9
11,313
PPA786, Class 19: Human Capital Programs
• ChalleNGe (MDRC; http://www.mdrc.org/publications/557/overview.html )
▫ The 17-month ChalleNGe program for youth is divided into three phases:
 Pre-ChalleNGe, a demanding two-week orientation and assessment period;
 a 20-week Residential Phase built around eight core components designed to promote
positive youth development;
 and a one-year Postresidential Phase featuring a structured mentoring program.
▫ During the first two phases, participants live at the program site, often on a military
base. The environment is “quasi-military,” though there are no requirements for
military service (but the NG stands for National Guard—the sponsor).
▫ The evaluation uses a random assignment design. Key findings:
 The program group was much more likely than the control group to have
obtained a high school diploma or a General Educational Development
certificate (GED) and to have earned college credits. For example, about 61
percent of the program group had earned a diploma or a GED, compared with 36
percent of the control group.
 At the time of the survey, program group members were somewhat more
likely to be engaged in productive activities. For example, 72 percent of the
program group were working, in school or training, or in the military, compared with
66 percent of the control group.
PPA786, Class 19: Human Capital Programs
• Employment and Training Programs for Adults
▫ Key Lessons from MDRC
PPA786, Class 19: Human Capital Programs
• Lesson 1 (MDRC; www.mdrc.org )
▫ We know how to help low-income individuals
prepare for and find jobs.
▫ The most effective job preparation and placement
programs required welfare recipients to participate in
employment-related activities, provided a mix of job
search activities and short-term education/training,
and included a strong focus on quick employment.
▫ However, such programs usually placed participants
into low-wage jobs, many without benefits. Many
participants became “working poor.”
PPA786, Class 19: Human Capital Programs
• Lesson 2 (MDRC)
▫ A variety of strategies to help low-income
individuals remain employed and move up to
better jobs have had mixed results at best.
▫ Simply offering generic post-employment job coaching,
guidance, advice, and training referrals is unlikely to make
a difference.
 The Employment Retention and Advancement (ERA)
demonstration tested 12 different models across six states
using careful randomized trials. Nine of those models, most of
which included general post-employment coaching and
support as the dominant strategy, did not work.
 The Work Advancement and Support Center (WASC)
demonstration for low-wage workers in 3 cities, which
combined a focus on increased take-up of work supports and
post-employment job coaching, produced inconsistent effects
on earnings.
PPA786, Class 19: Human Capital Programs
• Lesson 3 (MDRC)
▫ Financial work incentives combined with job
coaching and guidance after being placed in a
job may strengthen employment retention.
▫ Interventions that combined post-placement guidance
and advice with financial supplements (offered as a
regular stipend when workers remained employed full
time) had positive effects on employment retention
and earnings for certain populations.
 For example, these combined strategies increased the
average annual earnings of unemployed single parents on
welfare in the ERA program in Corpus Christi, Texas (one
of the three ERA models that had positive effects).
 A stronger emphasis on direct and ongoing job
development and employer connections may also
contribute to better results.
PPA786, Class 19: Human Capital Programs
• Lesson 4 (MDRC)
▫ Increasing participation in training
programs does not always produce labor
market gains.
▫ Many participants do not complete the programs.
▫ But even doing so may not guarantee increased
earnings.
▫ When programs offer only generic guidance by
staff lacking deep knowledge about particular
labor market sectors and without a focus on indemand occupations and connections to
employers, training may not pay off.
PPA786, Class 19: Human Capital Programs
• Key Lessons (D. Bloom and Michalopoulos, MDRC)
▫ Almost all states now require adult welfare recipients to work or prepare
for work, and they have experimented with combinations of:
 rapid job placement and
 education or training.
▫ Side-by-side tests of programs at opposite ends of the spectrum — those
requiring most recipients to look for work (“job search first”) and those
requiring most to enter education or training (“education first”) — in
three counties revealed that they ultimately produced similar overall
gains in employment and earnings.
▫ However, the job-search-first programs produced larger immediate gains
and, in the medium term, led to larger gains for more disadvantaged
groups, such as people without a high school credential.
▫ The job-search-first programs were also less expensive to operate.
PPA786, Class 19: Human Capital Programs
• Key Lessons, 2 (Bloom and Michalopoulos, MDRC)
▫ The most effective programs fell in the middle of the spectrum. In these
programs, some recipients started by looking for work, while others
started with education or training.
 This finding suggests that a more individualized approach may be most
promising, but — given that not all the programs that used the mixed
approach were highly successful — the types of services provided and the
basis on which people are assigned to services appear to be also critical.
▫ For programs across the spectrum, most people who went to work
obtained low-wage or part-time jobs; some left welfare without finding
work; and most of the programs had rules that reduced people’s welfare
benefits by a dollar for each dollar they earned.
 As a result, programs that included only mandatory employment services
usually left families no better off financially than they would have been
without the programs, even after accounting for the federal Earned
Income Credit (EIC, the federal tax credit that supplements the earnings
of low-income families).
PPA786, Class 19: Human Capital Programs
• Key Lessons, 3 (Bloom and Michalopoulos, MDRC)
▫ The only programs that both increased work and made families
financially better off were those that provided earnings
supplements to low-wage workers.
▫ In contrast to the programs that used only mandatory
employment services, two programs that supplemented the
earnings of working recipients boosted both employment and
income relative to control group levels.
 One of these programs allowed welfare recipients who went to
work to keep more of their benefits than under the old welfare
system (an approach now used in many states),
 while the other supplemented earnings outside the welfare system.
 Both approaches cost more than traditional welfare, but they also
produced a range of positive effects for children — for example,
higher levels of school achievement.
PPA786, Class 19: Human Capital Programs
• Key Lessons, 4 (Bloom and Michalopoulos, MDRC)
▫ These results suggest that policymakers face a critical choice.
 Programs that provided only mandatory employment services increased
work and reduced welfare use but usually did not lead to notable
improvements in families’ economic circumstances or help children —
even after accounting for the EIC.
 Achieving these goals may require further supplementation of families’
earnings. Most states already do this by allowing working recipients to
keep part of their benefits, but the income-enhancing effects of such
policies are undermined by welfare time limits.
▫ Federal and state policymakers who aim to improve outcomes for
families and children may need to develop new ways of providing
ongoing financial support to low-wage workers — an approach that may
raise costs — while continuing to test strategies for raising wages through
education and training.
▫ http://www.mdrc.org/publications/99/overview.html
PPA786, Class 19: Human Capital Programs
• Evaluation of Adult Job Programs: Examples
▫ New Hope
▫ GAIN (now CalWORKS)
▫ Jobs-Plus
▫ Form more, check out
 http://www.mdrc.org/issue/work-and-incomesecurity or
 http://www.mathematica-mpr.com/labor/
PPA786, Class 19: Human Capital Programs
• New Hope (MDRC)
▫ New Hope was implemented in 1994 in Milwaukee. It provided full-time
workers with an earnings supplement to raise their income above poverty,
low-cost health insurance, and subsidized child care. For those unable to
find full-time work, the program offered help in finding a job or referral to
a wage-paying community service job. Each of these benefits was available
for up to three years.
▫ The MDRC evaluation used random assignment to summarize the
program’s effects over the first three years while the program operated
and five years after it had ended. It found a range of positive effects:
 Adults in the New Hope program were more likely to work than the control
group, and the combination of earnings supplements and the Earned
Income Tax Credit also resulted in higher incomes. Most of these effects did
not last beyond the three years that the program operated — except for a
subgroup of individuals facing moderate barriers to work, for whom New
Hope increased employment, earnings, and income through Year 8.
 Positive effects on children’s academic performance and test scores were
evident at the two- and five-year marks. By Year 8, effects on performance
had faded, and new effects had emerged. New Hope children reported being
more engaged in school than control group children, and their parents were
less likely than control group parents to report that their children had
repeated a grade, received poor grades, or been placed in special education.
PPA786, Class 19: Human Capital Programs
• Greater Avenues for Independence (GAIN)
▫ California's GAIN program was evaluated in six county
sites during the late 1980s using random assignment.
▫ Program services ranged from a "work first"
orientation in one county to a more "human capital"
approach in the other five counties.
▫ The overall impacts were modest but significant, with
earnings gains averaging $471 per year for singleparent household heads and $370 for two-parent
household heads.
▫ The earnings gains exceeded the loss in welfare for
single parents, but not for two-parent households.
PPA786, Class 19: Human Capital Programs
• Jobs-First GAIN
▫ In 1995, LA County modified GAIN to incorporate
a mandatory welfare-to-work program with a
strong focus on employment—Jobs-First GAIN.
▫ For single-parents, earnings gains for participants
exceeded $1,600 over two years, an increase of 26
percent over the control group. Two-parent
families had even larger effects.
▫ Significant favorable effects were also found for
employment rates, welfare use, welfare payments,
and (by the end of the sample period) income.
PPA786, Class 19: Human Capital Programs
Source: Karoly
PPA786, Class 19: Human Capital Programs
PPA786, Class 19: Human Capital Programs
PPA786, Class 19: Human Capital Programs
• Jobs-Plus (H. Bloom et al., MDRC)
▫ Jobs-Plus is a place-based jobs program. See
http://www.mdrc.org/publications/405/overview.html
▫ The Jobs-Plus Community Revitalization Initiative for Public Housing
Families (Jobs-Plus, for short) was implemented in selected public
housing developments in six cities: Baltimore, Chattanooga, Dayton, Los
Angeles, St. Paul, and Seattle.
▫ The program — which was targeted to all working-age, nondisabled
residents of selected public housing developments and implemented by a
collaboration of local organizations — had three main components:
 employment-related services,
 rent-based work incentives that allowed residents to keep more of their
earnings, and
 activities to promote neighbor-to-neighbor support for work.
PPA786, Class 19: Human Capital Programs
• Jobs-Plus, 2 (H. Bloom et al., MDRC)
▫ Jobs-Plus markedly increased the earnings of residents (including those
who eventually moved away) relative to the comparison group.
 This impact was sustained over time at three of the sites
 but disappeared at the fourth when its residents were displaced by a
federal HOPE VI renovation project.
 There was no program effect on earnings at the two sites that did not fully
implement Jobs-Plus.
▫ The effects of Jobs-Plus on employment were positive at the sites that
substantially implemented the program but were smaller and less
consistent than the effects on earnings.
▫ The large positive earnings effect of Jobs-Plus in the stronger
implementation sites held for a wide range of residents defined in terms
of their gender, race or ethnicity, age, past employment, past welfare
receipt, past duration of residence, and future resident mobility. Most
striking were the especially large impacts for immigrant men.