Skill Overshooting in Job Training With the Trade Adjustment Assistance Program

Abstract

The authors investigate the training choices made by workers entering the Trade Adjustment Assistance program and their postexit outcomes. This is important as more workers enter these types of programs due to technological change and globalization. Their study shows that workers that choose a training occupation beyond their skill level (skill overshooting) achieve higher earnings ($615 annually) and wage replacement rates (2.0 percentage points) at the cost of lower reemployment rates (−1.9 percentage points) immediately following program exit. An investigation of subsamples shows that skill overshooting is especially beneficial to females and those living in rural areas with earnings gains of $1,443 and $1,080, respectively, without hurting their chances of reemployment.