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 financial- capital 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-out- prevention 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 class- size 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 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. ▫The most recent experimental evaluation involving over 15,000 youth in 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 (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)

PPA786, Class 19: Human Capital Programs Jobs Corps (Schochet, et al., AER, 2008)

PPA786, Class 19: Human Capital Programs ChalleNGe (MDRC; ) ▫The 17-month ChalleNGe program 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. ▫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 Youth Opportunities Program (Holzer) ▫The Youth Opportunities program at the U.S. Department of Labor provided grants to 36 low- income neighborhoods to generate comprehensive education and employment programs for youth. ▫Evaluations of the program showed that resources targeted at neighborhoods could be used to generate systemic efforts that lead to improvements in both school enrollments and employment and earnings. ▫This is a place-based employment and training program.

PPA786, Class 19: Human Capital Programs Employment and Training Programs for Adults ▫New Hope ▫GAIN (now CalWORKS) ▫Key Lessons from MDRC

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 single- parent 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

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). ▫The only programs that both increased work and made families financially better off were those that provided earnings supplements to low-wage workers.

PPA786, Class 19: Human Capital Programs Jobs-Plus (H. Bloom et al., MDRC) ▫Jobs-Plus is a place-based jobs program. See ▫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.

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. ▫