CostBenefit Evaluation of Job Training Partnership Act Programs
Nia Harrison, Nikola Juris, Dori Stern, and Steven Stern
The Job Training Partnership Act (JTPA) of 1983 was designed to improve the employment status of disadvantaged young adults, dislocated workers, and individuals facing barriers to employment. The Act consists of onthejob training, job search assistance, general education and work experience, and improving participants’ occupational skills (JTPA, 2004). There have been many evaluations of the JTPA (see, for example, Heckman, Ichimura, and Todd). Using an evaluation of the program by Bloom et al. (1997), we evaluated the costs and the benefits of the program. These evaluations are shown below in Table 1. We performed a number of sensitivity analyses, shown in Table 2, to measure the robustness of our results.[1]
Table 1 



Boys 
Girls 
Effect on Annual
Earnings 
$589 
$135 
Effect on
Probability of Receiving a High School Diploma/GED 
0.005 
0.077 
Effect on the
Probability of Getting Arrested 
0.071 
0.017 
Probability of
Getting Arrested Given a Crime was committed 
0.088 
0.088 

$15 
$13.50 
Annual Earnings 
$30,000 
$27,000 
Cost of the
Program 
$2,377 
$2,377 
Annual Benefit of
Not Being Arrested 
$41,080 
$40,228 
Annual Benefit of
Not Committing a Crime 
$37,841 
$37,841 
Discount Factor 
0.9 
0.9 
Long Term Benefit
of Not Getting Arrested 
$29,167 
$6,839 
Long Term Benefit
of Earnings 
$5,890 
$1,350 
Net Benefit 
$23,857 
$6,455 
Bloom et al. (1997) estimate that the JTPA increases the probability of a program participant’s achieving a GED or High School diploma by 7.7% (0.5%) for females (males). They also estimate that the program’s effect on annual income earnings is $589 ($135) for males (females)[2] and that the program also decreases the probability of getting arrested by 1.7% (7.1%) for females (males). In addition, they report that the cost of the program as $2,377 for both females and males. We assumed that an average female (male) high school graduate earns $13.50 ($15.00) per hour. Assuming one works 2000 hours per year, we have base annual earnings of $27,000 ($30,000) for females (males). The probability of getting convicted conditional on committing a crime is 8.8%.[3] The annual benefit of not being arrested was calculated by adding the local cost of jail, $32,560,[4] to the amount that one’s annual earnings would be reduced as a result of being imprisoned. The annual benefit of not committing a crime was calculated as the cost of crime ($3330) divided by the probability of committing a crime given that a crime was committed (8.8%), resulting in $37,841 for both girls and boys.
In order to translate these calculations into longterm benefits, we assumed that the annual discount factor was 0.9 and that costs are incurred for only one year. The longterm benefit of not getting arrested was calculated as the program’s effect on the probability of getting arrested multiplied by the annual benefit of not getting arrested, discounted for the remainder of one’s life. Similarly, the longterm benefit of the change in earnings was calculated by adding the discounted stream of changed future earnings over the remainder of one’s life. Adding up the longterm benefits and the benefit of no crime multiplied by the program’s effect on the probability of being arrested, and then subtracting the cost of the program yields a net benefit of $6,455 ($23,857) for girls (boys).
Table 2 


Net Benefit of
the Program 

Boys 
$15 
$23,587 


$30 
$29,636 

Girls 
$13.50 
$6,455 


$27 
$7,759 
Annual Benefit of
Not Committing a Crime 
Boys 
$37,841 
$23,587 


$18,920 
$22,243 

Girls 
$37,841 
$6,455 


$18,921 
$6,133 
Discount Factor 
Boys 
0.9 
$23,587 


0.8 
$11,948 

Girls 
0.9 
$6,455 


0.8 
$2,361 
Effect on Annual
Earnings 
Boys 
$589 
$23,587 


$0 
$29,477 

Girls 
$135 
$6,455 


$0 
$5,105 
In Table 2, we changed various assumptions we had made for the base case – one at a time while holding the others constant – in order to measure the sensitivity of the base case analysis. First, changing the hourly wage received by a high school graduate to double the base assumption yields a new net benefit of $7,759 ($29,636) for girls (boys). Reducing the annual benefit of not committing a crime by half results in a new net benefit of $6,133 ($22,243) for girls (boys). Next, changing the discount factor from 0.9 to 0.8 results in a net benefit for girls (boys) of $2,361 ($11,948). Assuming that there is no effect on annual earnings yields net benefits of $5,105 ($29,477) for girls (boys). These analyses show that the Job Training Partnership Act is quite robust to the assumptions made and that, even with a negative base case effect on annual earnings for boys, the program can yield high monetary benefits. The source of the large benefits are the program’s large effects on crime reduction and the large costs of crime.
References
Bloom, H., L.
Orr,
Harrison, Nia, Nikola Juris, Dori Stern, and Steven Stern (2008). “Methodology for Youth Development CostBenefit Analyses.” http://www.people.virginia.edu/~sns5r/ccfstf/youthdevmethodology.pdf.
Heckman, James,
Hidehiko Ichimura, and
“Job Training Partnership Act” (2004). http://www.childtrends.org/Lifecourse/programs/ JobTrainingPartnershipAct.htm.
[1] Details of Methodology are available at Harrison, Juris, Stern, and Stern (2008).
[2] Many other analyses find that the program increases
earnings though by modest amounts.
[3] See Harrison,
Juris, Stern, and Stern (2008) for an analysis.
[4] Commission on Children and Families