Assessing the Impact of Off-the-Job and On-the-Job Training on Employment Outcomes: A Counterfactual Evaluation of the PIPOL Program

Abstract

This article studies the effect of PIPOL, an integrated program of active labor policies launched by the Friuli Venezia Giulia, an Italian region, in 2014. To understand the impact of training in a classroom setting (off-the-job) and work-related training (on-the-job) on employment integration of benefit recipients. We adopt a counterfactual approach by comparing a target group (treated) against a control group (19,899) extracted by means of propensity score matching and Mahalanobis distance matching among subjects who, while registered in the program over the years 2014-2016, had never benefited from it. The selection of about 7,175 recipients in the program and in each type of intervention was random. Subjects: About 30,000 job seekers made up of 3,911 interns, 2,945 trainees, and 319 recipients of training and internship within PIPOL. Target: Young people, Not in Education Employment or Trainings, and over 30s. We look at different outcomes: employment tout court and employment in open-ended contracts. The overall net impact of PIPOL was equal to +5 pp on average. Specifically, impact results were classroom training none, internship sizable (+14.1 pp), and training combined with an internship, quite sizable (+9.6 pp). Furthermore, training to gain a qualification was the most effective (+6.4 pp) among those receiving combined training and internship. Internship also increased the chance to find permanent employment (+3 pp). Among recipients, women, immigrants, and low-skilled recipients registered the most sizable impact on finding employment and training in manufacturing and construction was more effective than elsewhere. Italian young people have ever-increasing academic attainment but, due to the sequential nature of the education system, little work-related competences. This could explain the greater success of internships on classroom training.