Can Business Input Improve the Effectiveness of Worker Training? Evidence from Brazil's Pronatec-MDIC

We evaluate a recent large-scale occupational training program in Brazil that explicitly takes input from firms in determining the location, scale, and skill content of courses offered. We exploit rich monthly administrative... [ view full abstract ]

We evaluate a recent large-scale occupational training program in Brazil that explicitly takes input from firms in determining the location, scale, and skill content of courses offered. We exploit rich monthly administrative data on workers' employment histories to estimate the effect of training on employment and wages. Training increases the probability of employment by three percentage points, on average, over the year following course completion. These effects occur through firm-supplied registrants who gain employment at requesting firms and from other trainees who find employment at non-requesting firms. The demand-driven program's effects are larger and statistically distinguishable from those of a publicly-administered skills training program run in parallel that did not take input from firms. IV estimates using course capacity restrictions to instrument for course completion yield effect sizes that are approximately twice as large.