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

Background: 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. Objectives: 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. Research design: 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. Measures: We look at different outcomes: employment tout court and employment in open-ended contracts. Results: 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. Conclusions: 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.