Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2008:1: The aggregate labor market effects of the Swedish knowledge lift program

James Albrecht , Gerard J van den Berg () and Susan Vroman
Additional contact information
James Albrecht: Department of Economics, Georgetown University
Gerard J van den Berg: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Susan Vroman: Department of Economics, Georgetown University

Abstract: The Swedish adult education program known as the Knowledge Lift (1997-2002) was unprecedented in its size and scope, aiming to raise the skill level of large numbers of low-skill workers. This paper evaluates the potential effects of this program on aggregate labor market outcomes. This is done by calibrating an equilibrium search model with heterogeneous worker skills using pre-program data and then forecasting the program impacts. Our calibrations suggest that the equilibrium treatment effects were positive - wages are predicted to increase, as are the employment rates of the treated. The equilibrium effects magnify the partial effects by a factor 1.5 to 2. This is due to the increase in demand for skills that is triggered by the increase in its supply.

Keywords: Job search; policy evaluation; wages; unemployment; Swedish labor market; calibration; adult education; equilibrium effects

JEL-codes: I21

29 pages, December 20, 2007

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