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The Benefits and Costs of Job Corps

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The Benefits and Costs of Job Corps Contract No.: K-4279-3-00-80-30 MPR Reference No.: 8140-530 National Job Corps Study: The Benefits and Costs of Job Corps June 2001 Sheena McConnell Steven Glazerman Submitted to: Submitted by: U.S. Department of Labor Mathematica Policy Research, Inc. Employment and Training Administration 600 Maryland Avenue, SW Office of Policy and Research Suite 550 Room N-5637 Washington, DC 20024-2512 200 Constitution Avenue, NW (609) 799-3535 Washington, DC 20210 In conjunction with: Project Officer: Daniel Ryan Battelle Memorial Institute (Subcontractor) Project Director: 4500 Sands Point Way, NE, Suite 400 John Burghardt Seattle, WA 98105-3949 Principal Investigators: Decision Information Resources, Inc. Terry Johnson (Subcontractor) Charles Metcalf 2600 Southwest Freeway, Suite 900 Peter Z. Schochet Houston, TX 77098 This report has been produced under Contract Number K-4279-3-00-80-30 with the U.S. Department of Labor, Employment and Training Administration. The contents of the report do not necessarily reflect the views or policies of the Department of Labor, nor does mention of trade names, commercial products, or organizations imply endorsement of these by the U.S. Government. ii ACKNOWLEDGMENTS We would like to thank the many people who contributed to this report. We would especially like to thank John Burghardt and Peter Schochet from Mathematica, who were involved in every stage of the benefit-cost analysis and made valuable contributions to the design of the study, the interpretation of the findings, and the content of the report. Walter Corson, Chuck Metcalf, and Craig Thornton of Mathematica and members of the study advisory panel also made important contributions to the analysis. Walter Corson also provided many suggestions on an earlier draft of the report. Daniel Ryan, project officer for the study, provided advice and guidance throughout the study and useful comments on an earlier draft of the report. We are also grateful to Steven Puterbaugh of the National Office of Job Corps who provided us with data on program expenditures and patiently answered our many questions about the data. We also thank the staff at Job Corps centers who provided us with data on grants, donations, and volunteers at their centers. The benefit-cost analysis drew extensively on the impact analysis, and we would like to thank everyone whose efforts made that part of the study successful. We are also indebted to the many people who provided valuable advice on specific technical issues related to the analysis, including David Card of the University of California, Berkeley, Karen Needels and Chris Ross of Mathematica, and David Weiner of the U.S. Congressional Budget Office. April Grady, Ruo-Jiao Cao, and Joan James provided expert programming assistance. Walter Brower provided valuable editorial assistance and Felita Buckner did an excellent job producing the report. iii CONTENTS EXECUTIVE SUMMARY................................................................................................... xv I. INTRODUCTION........................................................................................................... 1 A. OVERVIEW OF JOB CORPS................................................................................ 2 1. Outreach and Admissions................................................................................ 3 2. Job Corps Center Services............................................................................... 3 3. Placement ........................................................................................................ 5 4. Characteristics of Youths Served by Job Corps .............................................. 5 5. Policy Changes Related to Violence and Drugs.............................................. 6 B. OVERVIEW OF THE NATIONAL JOB CORPS STUDY ................................... 7 1. Research Questions......................................................................................... 7 2. The Impact Analysis........................................................................................ 8 3. Key Findings from the Impact and Process Studies...................................... 14 C. ORGANIZATION OF THE REST OF THE REPORT........................................ 15 II. OVERVIEW OF METHODOLOGY ........................................................................... 17 A. BENEFITS AND COSTS INCLUDED IN THE ANALYSIS ............................. 17 1. Benefits.......................................................................................................... 18 2. Costs.............................................................................................................. 21 3. Unmeasured Benefits and Costs.................................................................... 22 B. DIFFERENT PERSPECTIVES ON BENEFITS AND COSTS........................... 22 1. Three Different Perspectives......................................................................... 23 2. Transfers........................................................................................................ 24 C. APPROACH TO MEASURING BENEFITS AND COSTS................................ 24 1. Impact Estimates........................................................................................... 25 2. Converting Impacts into Benefits and Costs with Dollar Values.................. 26 3. Use of Average Costs.................................................................................... 27 D. EXTRAPOLATING BENEFITS AFTER THE OBSERVATION PERIOD....... 27 v CONTENTS (continued) E. COMPARING BENEFITS AND COSTS THAT OCCUR AT DIFFERENT TIMES ................................................................................................................... 28 1. Presenting All Benefits and Costs in Constant Dollars................................. 28 2. Discounting Future Benefits.......................................................................... 29 F. SENSITIVITY OF THE BENEFIT-COST ESTIMATES.................................... 30 III. BENEFITS FROM INCREASED OUTPUT................................................................. 33 A. INCREASED OUTPUT FROM EMPLOYMENT DURING THE OBSERVATION PERIOD ................................................................................... 34 1. Approach to Measuring Output..................................................................... 36 2. Estimates of the Value of Fringe Benefits..................................................... 36 3. Estimates of Increased Output During the Observation Period .................... 41 B. INCREASED OUTPUT AFTER THE OBSERVATION PERIOD..................... 42 1. Time-Pattern of Earnings Impacts During the Observation Period .............. 43 2. Evidence on the Time-Pattern of Earnings Impacts from Other Studies ...... 43 3. Approach to Extrapolating the Increased Output.......................................... 47 C. INCREASED CHILD CARE COSTS .................................................................. 50 D. INCREASED TAXES........................................................................................... 54 E. OUTPUT PRODUCED DURING VOCATIONAL TRAINING......................... 57 F. SUMMARY .......................................................................................................... 60 IV. BENEFITS FROM REDUCED USE OF PROGRAMS AND SERVICES OTHER THAN JOB CORPS ...................................................................................................... 63 A. REDUCED USE OF OTHER EDUCATION AND TRAINING PROGRAMS ......................................................................................................... 63 1. Impacts on the Use of Other Education and Training Programs................... 64 2. Costs of Attending Other Education and Training Programs........................ 67 3. Benefits from the Reduced Use of Other Education and Training Programs........................................................................................................ 71 B. REDUCED USE OF PUBLIC ASSISTANCE ..................................................... 72 vi CONTENTS (continued) 1. Impacts on the Use of Public Assistance ...................................................... 73 2. Costs of Public Assistance ............................................................................ 76 3. Benefits from the Reduced Use of Public Assistance ................................... 77 C. REDUCED USE OF SUBSTANCE ABUSE TREATMENT PROGRAMS....... 77 D. SUMMARY .......................................................................................................... 78 V. BENEFITS FROM REDUCED CRIME ........................................................................ 81 A. FRAMEWORK ..................................................................................................... 82 1. Two Sources of Benefits ............................................................................... 83 2. Crime Types .................................................................................................. 84 3. Timing of Benefits ........................................................................................ 84 4. Crime Against Participants............................................................................ 85 5. Unmeasured Benefits.................................................................................... 86 B. REDUCED CJS PROCESSING ........................................................................... 87 1. Impacts on Arrests........................................................................................
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