For decades, globalisation and new technology have helped boost productivity and prosperity, but they have also created both winners and losers on the labour market. The winners are especially highly educated people, while people with a lower level of education face an increased risk of lower pay or unemployment. At their jobs, individual employees may have built up skills and experience which are no longer in demand
on their domestic labour market, on account of the transfer of workplaces to low-pay countries, for example. For this reason, these workers may need supplementary training and education to help them find other, potentially better, jobs.

A new study supported by the ROCKWOOL Foundation and conducted by the Universities of Copenhagen and Chicago has now demonstrated that classroom training has significantly positive effects on the likelihood of jobseekers finding employment subsequent to following the programme. This applies in particular to jobseekers who have seen their jobs being transferred abroad, known as “offshoring”.

Denmark is one of the world leaders in investing resources in an active labour market policy whose purposes include alleviating structural problems on the labour market attributable to globalisation, for instance. In this context, classroom training is of particular interest in that this type of activation helps jobseekers acquire new skills. Nevertheless, research thus far in this area has indicated that classroom training does not appear to have positive effects on the labour market situation faced by jobseekers.

Random variation

This new study, however, utilises information about how jobseekers are allocated caseworkers at job centres on the basis of their date of birth. The tendency of caseworkers to refer jobseekers to activation programmes varies, resulting in random variation as to whether a given jobseeker finds a place on a classroom training or job training programme, or is not offered activation at all.

The study indicates that if, as in the majority of the existing literature, this random variation is not taken into account, then the classroom training appears to have significantly negative effects on employment during the first two quarters after people have become unemployed; even two years later on, the effects on employment remain negative, as illustrated by the grey lines in Figure 1.

Figure 1. Effects of classroom training on employment

If, however, allowance is made for the random variation regarding whether a jobseeker is enrolled in a classroom training programme, these negative effects are completely absent at the start of the unemployment period, and after six quarters, the positive effects on employment are clear to see. As such, after six quarters, jobseekers referred to a classroom training programme have, on average, found employment for 25 hours more per month than other jobseekers, which corresponds to 25 per cent higher employment.

The differences between the findings can be explained by the fact that the jobseekers referred to classroom training programmes are generally those with relatively poor employment potential. If this factor is not taken into account, classroom training will erroneously appear to be a less effective instrument than it actually is.