Mexico - Manpower Training Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12562 PROJECT C0MPLETION REPORT MEXICO MANPOWER TRAINING PROJECT (LOAN 2876-ME) NOVEMBER 30, 1993 IH I C-FGRAPH I CS Rs?port iia 12562 1 L.F , Human Resources Operations Division Country Department II Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed witut Wodd Bank authorization.  GLOSSARY CECATI Vocational School (Centro de Capacitaciln para el Taubajo Industrial) CIMO Inservice Training Program (Programa de Capacitaci6n Industrial de la Mano de Obra) CONALEP National Council for Vocational Education (Colegio Nacional de Educaci6n Profesional Tecnica) DEPE Directorate of Employment Studies and Policies (Direcci6n de Estudios y Poifticas de Empleo) DGCP Directorate General of Training and Productivity (Direccion General de Capacitaci6n y Productividad) DGE Directorate General of Employment (Direcci6n General de Empleo) DAO Directorate of Occupational Analysis (Direcci6n de Andlisis Ocupacional) ENEU Quarterly Urban Employment Survey (Encuesta Nacional de Empleo Urbano) FEPS Final Executive Project Summary IEPS Initial Executive Project Summary ICB International Competitive Bidding INEA National Institute for Adult Education (Instituto Nacional de Educaci6n para Adultos) INEGI National Institute of Statistics aInstituto Nacional de Estad(sticas, Geogra,ffa e Informdtica) LCB Local Competitive Bidding NAFIN National Financing Company (Nacional Financiera) PCR Project Completion Report SAR Staff Appraisal Report SEE State Employment Service (Serviclo Estatal de Empleo) SEP Secretariat of Education (Secretarta de Educaci6n Pdblica) SHCP Secretariat of Finance (Secretarta de Hacienda y Credito Pablico) SME Small and Medium-Scale Enterprise SNE Directorate of National Employment Service (Direcci6n del Servicio Nacional de Empleo) STPS Secretariat of Labor and Social Welfare (Secretarta del Trabajo y Previsi6n Social) PROBECAT Labor Retraining Program (Programa de Becas de Capacitaci6n para Trobajadores Desempleados) UPA Central Inservice Training Promotion Unit (Unidad de Promoci6n y Apoyo) UPC Regional Inservice Training Promotion Unit (Unidad Promotora de la Capacitaci6n)  FOR OMCUL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.SA omffce of Odor4oeral Operatons Evaon November 30, 1993 MENORANM)UM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Mexico Manpower Training Project fLn. 2876&ME) Attached is the Project Completion Report on Mexico - Manpower Training Project (Ln. 2876-ME) prepared by the Latin America and the Caribbean Regicnal Office. Part II was prepared by the Borrower. The PCR gives a good account of the project history. The outcome is rated as satisfactory, most physical targets were exceeded by sizeable margins, and the project was completed ahead of schedule. In addition, substantial institutional development took place of which one aspect merits explicit mention: since the Government chose not to establish a special implementation unit, the project led to a broad accumulation of experience throughout the implementing agency, the Directorate General of Employment. Sustainability of the various project achievements appears likely: the Government continues to pursue greater cost-efficiency of the training programs, and a gradual shift of some of the financial burdens to the private sector is under way. At project completion it was stil too early to assess the extemal effects of the various training courses. However, some preliminary data pointed to differences in benefits between male and female trainees. This led to the use of more specific selection criteria for trainees in the follow-on project (Labor Market and Productivity Enhancement Project, assisted by Loan 3542-ME). An audit of this project is planned together with its successor. Attachment This document has a restricted distibution and may be used by recipients only in the performance of their oflcial duties. its conternt may not otherwise be disclosed without World Bank authorizaton.  FOR OFFICIAL USE ONLY UNITED MEXICAN STATES MAN-POWER TRAINING PROJECT (Loan 2876-ME) PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No. PREFACE ......................................................... i EVALUATION SUMMARY ........... ................................. 1i1 I. PROJECT REVIEW FROM THE BANK'S PERSPECrIVE.. I A Project Identity .. B. Project Background. 1 C Project Objectives and Content .................. 1 D. Project Design and Organization .............................. 3 E. Project Implementation, Cost, and Fmancing . . 3 F. Main Results of the Project .5 '. Project Sustainability ..10 H. The Bank's Performance and Lessons Learned . .11 I. The Borrower's Performance and Lessons Learned .12 J. Project Relationships .13 K. Consultant Services .13 L. Project Documentation and Data .14 I. PROJECT REVIEW FROM THE BORROWER'S PERSPECIVE. 15 A. Accuracy of the Information Contained in Part I.. 15 B. Comments on the Analysis in Part I. 15 C. The Banks Performance, and Lessons Learned. 15 D. Lessons Learned during Project Implementation .16 E. Evaluation of the Borrower's Performance .16 F. Relationship between the World Bank and STPS .16 G. Evaluation of Cofinanciers .17 mH. STATISTICAL INFORMAIION ................................ 18 A. Related Bank Loans . ....................................... 18 B. Project Timetable ........... .............................. 20 C. Loan Disbursements .......... ............................. 21 D. Project Costs and Financing ................................. 23 E. Project Results ............ ............................... 25 F. Status of Loan Covenants ................................... 29 G. Use of Bank Resources .32 ANNEX 1 List of Documents Related to this Project Completion Report which are Available in the Project File .34 ANNEX 2 List of Studies Financed under the Project .35 ANNEX 3 The Impact of Mexico's Retraining Program on Employment and Wages .36 MAP IBRD 20343 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT COMPLETION REPORT MEXICo MANPOWER TRAINING PROJECT (Loan 2876-ME) PREFACE This is the Project Completion Report (PCR) for the Manpower Training Project in Mexico, for which Loan 2876-ME in the amount of US $80.0 million was approved on October 6, 1987. The Loan became effective on October 21, 1987. The original closing date was December 31, 1993, but the Loan is expected to close on June 30, 1993, sLx months ahead of the original date. The final disbursement under the Loan is expected to take place on June 1S, 1993. The PCR was jointly prepared by the Human Resources Divisions of Country Department ll and the Technical Department in the Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts I and III), and the Borrower (Part II). This report is based, inter alia, on the Staff Appraisal Report, the Loan Agreement, the record of the Board discussion of the project, documentation in the Bank's files pertinent to this operation, and the findings of the project completion report preparation mission.  - iii - UNIT MEXICAN STATES MANPOWER TRAINING PROJECT (Lan 2876-ME) PRO.lECT COMPLMTION REPORT EVALUATION SUMMARY Introduction 1. This Project was the Bank's third operation in the education and training sector in Mexicc following the CONALEP I (Loan 2042-ME) and II (Loan 2559-ME) projects which were completed in 1984 and 1991, respectively. It was followed up by the Labor Market and Productivity Enhancement Project (Loan 3542-ME), approved by the Board in December, 1992. The Manpowver Training Project was appraised in May, 1987, and approved by the Board in October, 1987. At appraisal, total costs were estimated at US$156.00 million, US$80.00 million of which was to be financed by an IBRD Loan. The Project was substantially completed in December, 31, 1992 and thus required five years and three months for completion. The Loan is scheduled to be fully disbursed in 5.7 years and is scheduled to be closed by the end of June 1993, six months before the anticipated Closing Date. Project Objectives and Content 2. The Project's overall purpose was to reduce human resources constraints to growth, increase Labor productivity, and broaden training opportunities while at the same time lessening the cost of economic adjustment on vulnerable groups, such as poor displaced workers as well as employees in small and medium-sized enterprises. These objectives were addressed through four project components: (a) an Employment Services and Labor Retraining Component, (b) a Demonstration Inservice Training and Productivity Component, (c) an Institutional Strengthening Component for the Secretariat of Labor and Social Welfare (STPS), and (d) a Training Institutions Upgrading Component. Implementation Experience 3. The Project was implemented in a very effective and efficient manner by the General Directorate of Employment (DGE) of STPS. It was carried out essentially as planned, with only minor variations mainly as a result of adjustments in pilot-type programs. Virtually all key implementation indicators were met or surpassed. Project implementation was facilitated by close Bank supervision and particularly the mid-term review which resolved the few implementation issues outstanding. Disbursements were consistently ahead of forecast due to the acceleration of the training programs and the rapid and effective expansion of the InservieL Training Program (CIMO) for small and medium-scale enterprises (SMEs). The Loan is anticipated to be fully disbursed by June 15, 1993 and is scheduled to be closed on June 30, 1993, i.e. 6 months ahead of the anticipated Closing Date.  - iv - Prolic Results 4. The project has achieved its overall goals of reducing human resources constraints to growth, Increasing worker productivity, reducing the social cost of adjustment, and broadening training opportunities for disadvantaged groups. Concretely, the project hac achieved the following (appraisal targets are given in parentheses): retraining of workers 293,317 (160,000); retraining courses conducted 19,939 (8,000); inservice training of workers 212,380 (75,500); UPCs established 30 (20); STPS staff upgraded 1,041 (100); and training programs receiving equipment 1,374 (1,000). In particular, the projectes institutional strengthening programs have clearly had a very substantial positive impact - the enhanced capacity of STPS providing a very strong base for the implementation of the Labor Market and Productivity Enhancement Project. The real long-term development impact of the project was enhanced significantly by the fact that there was no project implementation unit, therefore the experience gained through implementation, and the capacity-building provided through the project, contribi ed directly to the strengthening of STPS. For a project, most of whose components were tho first programs of their kind in Mexico, and some of which are still evolving, a full assessment of impact is rather difficult. However, a detailed analysis of the effectiveness of the taining programs for the unemployed was undertaken and is attached as Annex 3. This demonses a very positive impact for male trainees with previous work experience, but a rather doubtfWl impact for female trainees. This experience has led to improved selection criteria for trainees under the follow-up Labor Market and Productivity Enhancement Project. A fuller evaluation of the impact of this improved approach to retraining will be undertaken in the follow-up project. Project SustainabUity 5. The institutional strengthening activities of the project at the federal and state levels, staff training, development of information systems, strengthening of employment services and upgrading of training institutions, improved institutional capacity and operational efficiency of the STPS and State Ez,ployment Services (SEEs). The sustainability of these services has been reinforced by the follow- up Labor Market and Productivity Enhancement Project (Loan 3542-ME of Decemnber, 1992). The sustinability of the labor retraining program will be enhanced by greater cost-effectiveness in resource use in future through improved targeting. The sustainability of the CIMO program is being enhanced by the progressive transfer of the costs to the private sector beneficiaries. Evaluations of the retaining and inservice training programs were undertaken during project implementation and wil be complemented by in-depth evaluations under the follow-up Labor Market and Productivity Enhancement Project which will provide a firmer basis for a judgment as to long-term sustainability. To a large measure, the excellent project results achieved and the good prospects for sustainability can be attributed to the fact that no special project implementation unit (PIU) was created, rather ongoing activites and mainline functions of the STPS were strengthened and developed. Lessons Learned and Recommendations 6. The are many lessons to be learnt from this successful and innovative project (for its time). These lessons, with respect to substance and process, are summarized as follows:  (a) Ubstance: - a competent and committed executing agency (such as STPS) can exceed appraisal targets both with respect to attainment of physical objectives and the disbursement of funds - In this case retraining and inservice training programs were developed more rapidly than contemplated reflecting technical competence, a high level of project ownership and the fact that the project had no project implementation unit, but was fully integrated in the normal structure of the STPS (para.7); - the cost of the retraining-cum-stipend program of the PROBECAT type can be outweighed by the monetary benefits of graduates finding a job more quickly; trainee's mature age and prior work experience are important determinants of cost-effectiveness of such programs (para. 14); labor retraining programs should include a built-in monitoring and evaluation system to allow for continuous assessment of internal and external efficiency (this built-in mechanism must be carefully designed to include a control or comparison group (para. 14) - such an evaluation system has been incorporated from the outset in the follow-up Labor Market and Productivity Enhancement Project) and particular attention should be given in the design of large retraining programs to rigorously enforcing strict selection criteria to make an optimal selection of trainees (e.g. applicants with previous work experience), taking into account the widely dispersed operative responsibilities typical of such programs - such an approach is being adopted in the follow-up project (para. 14); - SMEs in many countries probably need the type of assistance provided by this Project's inservice training support program, however, training alone is seldom the only problem; SME support must be able to diagnose a range of problems; having the support from and participation of industrial and business associations is critical to the success of this type of program; so is critical the careful selection and training of program promoters; in this project the solid integration of clients in the planning, execution and cost-sharing arrangements represents a cost-effective method for increasing productivity in SMEs in Mexico (para. 20); - systematic and continuous upgrading of Borrower staff's knowledge and skills to keep abreast of new developments and analysis methods is of the utmost importance for an effective instituton able to tackle rapidly evolving problems such as occur in labor markets (para. 23); likewise most similar operations should include the improvement of labor market information systems (para.23); and - relatively small, marginal investments in training equipment, can have high administrative costs, but can have high rates of return by improving the capacity and utilization of existing training centers (para. 26); (b) Dro: - when project management is highly competent, the Bank should see its role as one of support and facilitation rather than that of traditional supervision; continuity in Bank staffing of supervision missions is very beneficial (para. 29); in addition, a mid-term review of this project provided an extremely valuable opportunity to learn lessons, evaluate outcomes, adjust project content, implementation schedules and disseminate project results to other countries through a seminar which was held (para. 29); this was one of the first projects to have such a mid-term review, a practice which has now virtually become standard;  -vi - - when a common interest exists between the Borrower and the Bank to evaluate the economic efficiency of a program, this activity should be included as part of the project design (para. 32); the Bank may wish to promote joint preparation and co-publication with country authorities of reports based on country material for the dissemination of good outcomes for the benefit of other member countries (para. 32); - establishing a highly competent and committed management team, which should preferably be deeply involved from the beginning of sector work and project definition, is of critical importance for efficient project implementation, especially for complex and innovative projects, (para. 35); if such teams can be established, even large and complex projects can be implemented within the existing organizational framework of a Government agency, with consultants complementing the existing staff (para. 35); and - legal documents should not set tight dates for implementation of subcomponents very early in the implementat,on period unless there is a good chance that they can be met; particularly, the timing of procurement should not be overemphasized (para. 38).  UNITED MEXICAN ST*ATES MANPOWER TRAINING PROJECT (Loan 2876-ME) PROJECT COMPLETION REPORT PART I. PROE-T REVIEW FROM THE BANK'S PERSPECTIVE A. Project ldntity - Project Name: Manpower Training Project - Loan No.: 2876-ME - RVP Unit: Latin America and the Caribbean Regional Office Country Department II - Country: Mexico - Sector: Human Resources - Subsector: Employment and Training B. Project Background 1. Policy Context and Linkage among Project. Sector. and Macro Policy Objectives. The Manpower Training project was conceived as an imnportant complement to the economic restructuring and trade reform program begun by the Mexican Government in 1985 which was supported by the Bank, inter alia, through a series of sectoral adjustment loans. The Project's overall purpose was to help reduce human resources constraints to economic growth, increase labor productivity, and broaden training opportunities, while at the same time lessening the social impact of adjustment on vulnerable groups. Such groups included displaced workers and employees in small and medium sized enterprises which were perceived as being at risk of failure due to low productivity and limited competitiveness in an open market. 2. Sctor Development Objectives. Mexico's human resources sector development strategy was based on the sectoral policy objectives as stated in the Government's National Development Plan (1983-88), and was undergirded by macroeconomic reforms including the Trade Liberalization Policy, and the growth-oriented adjustment programs, which accorded high priority to measures that would help restore and sustain growth, facilitate the redeployment of manpower to more productive activities resulting from major restructuring and lessen the social cost of adjustment. The Government sought to strengthen its employment services and retraining programs to better s.ve the poorest of those displaced and unemployed, and provide more effective inservice training to large numbers of middle- level technicians and skilled workers working in small and medium scale enterprises (SMEs). C. Project Okjectives and Cotent 3. Qbiecti. In support of the purpose and objectives of sector policy described in paras. 1-2, she project was designed to:  ^ 2 - (a) strengthen employment services provided at the state level and implement, as a transitional measure during the restructuring process, an expanded and improved retraining program for displaced and unemployed workers, using existing training institutions; (b) assist private enterprises, especially SMEs in priority sectors and geographical areas, in upgrading the skills of employed workers by introducing a pilot demonstration, promotion and assistance program for inservice training; (c) strengthen the Secretariat of Labor and Social Welfare's (STPS) labor market monitoring capabilities by upgrading of staff, improvement of its information system, and carrying out policy studies aimed at guiding the future development of the training system; and (d) increase training capacity in critically needed specitahies by upgrading selected public and private training institutions through the provision of complementary equipment linked to a commitment by participating institutions to improve training operations and facilities maintenance. 4. Project Components. The above objectives were to be achieved through the coordinated implementation of four project components: (a) The Employment Services and Labor Retraining Component (originally estimated cost, excluding contingencies, US$75.9 million) was designed to: (i) improve and expand employment services through the training of 400 staff and by financing data processing equipment and related :echnical assistance; (ii) strengthen the planning, content, and implementation of STPS's retruaining program (PROBECAT) as a transitional measure, and establish systematic arrangements for monitoring and evaluation of the program's effectiveness; and (iii) provide improved retraining for about 160,000 economically disadvantaged and displaced or unemployed workers over four and a half years, including financing of trainee stipends to be awarded in accordance with criteria agreed with the Bank; (b) The Demonstration Inservice Training and Productivity Component (estimated cost, excluding contingencies, US$42.7 million) was to introduce, on a pilot basis, a system for promoting and supporting inservice training and related services among enterprises, especially SMEs, in priority economic sectors and regions. The component included measures to: (i) establish within or linked to selected associations of employers, 20 small Regional Inservice Training Promotion Units (UPCs) (initially called Technical Support Groups for Enterprises (GATEs)). The 20 UPCs were to target specifically 5,000 selected SMEs (out of a total of about 400,0^fJ in the Mexican formal economic sector)y. A small central support group called Central In- service Training Promotion Unit (UPA) was to be established in STPS to coordinate the program. All units services were to be provided by consultants contracted for a fixed term. Loan funds would finance the program on a declining scale to encourage 1' Study on training supply and demand, SIPS, 1985 (see para. 5).  - 3 . efforts to riiake the program self-financing through gradually increasing charges for advisory and training services; (ii) provide direct support for the organization and delivery of intensive. short-term training for about 75,500 employees in the 5,000 targeted SMEs; and (iii) initiate promotion services for inservice training in SMEs through dissemination of information on the labor market, productivity issues, and tra:ning opportunities to 20,000 additional, SMEs employing about 800,000 workers; (c) The STPS Institutional Strengtiening Component (estimated cost, excluding contingencies, US$2.6 million) was to strengthen STPS's capabilities by: (i) upgrading about 100 staff of the Secretariat in areas of program design and evaluation, labor market analysis, and productivity issues; (ii) developing improved labor market information systems at the federal and state levels, including computerization and related training; and (iii) undertaking priority studies; and (d) The Training Institutions Upgrading Component (estimated cost, excluding contingencies, US$13.2 million) was designed to enhance the capacity and utilization of existing training institutions by providing financing to some 500 training providers (later changed to 1,000 training programs, for reasons explained in Part IHI) for modernization or upgrading of equipment in existing facilities. Participating institutions were to be selected on the basis of agreed criteria including a record of having provided efficient services in the past, and commitments to upgrading of curricula, implementing maintenance programs and securing competent staff. D. Proiect Design and Organization S. Projec Oriin and Formulation. In July 1984, the Government requested Bank assistance for planning a country-wide subsector study of supply and demand for training. This study was completed in 1985 by STPS and seven other Govermnent agencies. The results were published in the STPS Report OQfeta y Necesidades de Capacitacion 1985-88" and were summarized in a Bank Subsector Memorandum dated March 14, 1986 entitled "Technical Education in Mexico: A Subsector Study of Training and Skill Development". Based on the study, a project was identified in May 1986 and project preparation began in September 1986. A Project Preparation Facility (PPF) was approved on November 12, 1986 and appraisal took place in May 1987. 6. Prje Design and C)rgization. Thanks to being based on a solid subsector study prepared jointly by several Government institutons and the Bank and thorough preparation, the project had a clear conceptual foundation, and was of an appropriate and realistic scale and scope under the prevailing circumstances and in relation to Its objectives. Its objectives, design and implemenntation plan were understood and agreed by all relevant parties. The project was consistent with the Government's human resources sector development plans and programs which guaranteed its timeliness and ensured strong political support. These factors, plus the fact that the project was implemented by a highly competent, enthusiastic and hard-working management group, help to explain the implementation success and timely completion of this complex and highly innovative operation.  E. Prolect Implenentation. Cost and Financing 7. 1plementtion. The project was implemented very effectively and efficiently by the Directorate General of Employment (DGE) of STPS. To a large measure. the excellent project results achieved and the good prospects for sustainability can be attributed to the fact that no special project implementation unit (PIU) was created, rather ongoing activites and mainline functions of the STPS were strengthened and developed. It was carried out essentially as planned. With the exception of the number of enterprises and trainees participating in 'mixed" retraining programsv and of the reduced number of trainees included in the follow-up studies, all key implementation indicators were met or surpassed (Part III, Table 6), disbursements were consistently ahead of forecast (Part 111, Table 3) due to the acceleration in the implementation of the retraining programn and rapid growth of the CIMO program. The Loan was fully disbursed and closed six months ahead of the anticipated closing date. There were unforeseen difficulties in the implementation of mixed retraining courses in which SMEs were expected to pay for the cost of training and the trainees were to receive stipends during the training period. The criteria for organizing this type of program called for a minimum number of trainees and the Government found that SMEs do not usually have the required infrastructure to provide training, nor do they have the resources to do it. Therefore, only after large scale enterprises were included did the program start functioning. There were delays in finalizing the labor market information system partly due to problems with information sources but mainly because of an expansion of the system's scope to respond to emerging needs. There were smaller than expected investments in general information dissemination about the inservice training program because of gradual reorientation of this pilot effort. These changes have not materially reduced the impact of the project. The project risks anticipated at appraisal did not materialize. Government support for the project remained strong throughout. The retraining programs proved to be effective, with 70% of male trainees and 40% of female trainees finding jobs within a year of completing training (the poorer performance of female trainees will be fully investigated under the Labor Market and Productivity Enhancement Project). Moreover, after an initially slow start, employer support for the inservice training program has been strong and provides a firm foundation for continued training of this type. 8. Procurement. The project procured a substantial quantity of equipment (computer and training equipment) at a total cost of US$16.0 million. After some initial difficulties related to equipment distribution, procurement of goods and services was effectively and efficiently managed, in accordance with Bank Guidelines, by DGL issisted by the Directorate General of Material Resources and General Services of STPS and by a private firm during the first two years of project implementation. There was no procurement of civil works. Procurement of technical assistance and consultants services proceeded smoothly and in accordance with Bank Guidane. 9. Costs and Financing (Part III, Tables 4 and 5). Final total project cost amounted to US$ 145.5 million, compared to US$156.0 million as estimated at appraisal. The final financing percentages, compared with anticipated percentages in parentheses, were: the Bank 55% (51%), Government 34% (23%), and Enterprises 11% (26%). The lower than expected percentage for iZ 'Mixed' retaining programs combine preservice institutional retraining fianced by the project with follow-up inservice taining in a collaborating enterprise. The enterprise helps to plan the course, select individual trainees, finance part of the costs under a cost-sharing formula and agree to employ 80% of the graduates following course completion.  enterprises and the correspondingly higher percentage for the Government were due to the lower than expected proportion of "mixed' (enterprise-based) courses in the retraining program and the somewhat slower than anticipated increase in self-financing of the inservice training program, although enterprises contributions to each training course were higher than expected (see para. 16). Unit costs for the retraining program have been lower than anticipated because the minimum wage given to trainees as stipends did not keep up with local inflation; this, together with the increased number of inservice training units (UPCs) and their much better than expected penetration of the market, explains the substantially larger than expected numbers of workers trained in project programs. F. Main Results of the Project 10. Overall Implementation Results and Impact Assessment. In terms of rapid and complete implementation and achievement of objectives the project has been very successful. Each of the four components met or surpassed most of their quantitative goals (Part Ill Table 6). 11. For a project, most of whose components are the first programs of their kind in Mexico and some of which are still evolving, an initial assessment suggests that the project has been effective in achieving its overall goals of reducing human resources constraints to growth, reducing the social cost of adjustment, and broadening training opportunities for disadvantaged groups. It has clearly contributed to continuity and consistency in the implementation of the Government's policies and programs. A more detailed assessment of the project's impact, based on impact evaluation studies as well as its sustainability (Section G) will be carried during the implementation of the follow-up Labor Market & Productivity Enhancement Project (Loan 3542-ME approved December 1992). At this stage, the following can be said in this respect for the four project components: 12. The Employment Services and Labor Retraining Component. The project's impact on the State Employment Services (SEE) has been positive: staff are better trained and motivated, the SEE offices have some modern equipment and software to work with; and staff turnover has been reduced from close to 70% in 1989 to about 15% in 1991. During the project implementation period, SEEs have covered on average 254,074 job seekers and 247,463 vacancies per year. Given an annual labor force growth rate of 1.3% for the 1988-91 period and employment turnover of 17%, job seekers covered each year represent approximately 5.5% of the total number of jobs offered. 13. As of December 31, 1992, over 293,217 unemployed workers were retrained in over 19,939 courses. The percentage of trainees finding jobs within three months was about 60% for men and 33% for women. Some reasons for this discrepancy are given in Annex 3 and will be investigated more fully under the follow-up Loan 3542-ME. Whether trainees fared better than they would have without the program was difficult to assess, since this evaluation did not include a control group. The first evaluation study, which compared course completers to deserters (in the absence of a true control group) and relied on wage estimates, found that trainees not meeting the program's selection criteria resulted in very low rates of return, while targeted trainees obtained benefits far greater than the costs. These findings are consistent with the results of a recent program impact evaluation (which used previously unavailable data) carried out as part of the preparation work for the Labor Market and Productivity Enhancement Project. This new information includes panel data on a sample of individuals from the 1990-91 quarterly urban employment survey (ENEU), which form the basis for a  control group, and a new survey of PROBECAT trainees, providing an 18 month follow-up. The most important findings of this new evaluation are as followsg: (a) On average, graduates of the retraining program find employment quicker than do members of the control group - participation in PROBECAT reduces the average duration of unemployment by 2.5 months for males and by 1.9 months for females, with substantial variations (3.7 months for male and female graduates over 25 years of age, and no reduction at all for trainees without previous work experience). (b) Male graduates of PROBECAT are more likely to be employed three and six months after training than the controls, but not after 12 months. This finding is consistent with (a) and suggests that participation in the program shortens the time to find a job and thus increases the amount of time trainees spend in employment in the first year after training. (c) Female trainees with work experience are more likely to be employed three, six, and twelve months after program completion compared to the control group. However, women without prior work experience are less likely to be employed at comparable intervals after completing training. This finding suggests that many women without work experience, who otherwise would have remained outside the labor force, are being drawn into the program. (d) Male trainees are more likely to find employment in large firms than comparable controls. Large firms are known to pay higher salaries and provide more stable employment, more training and more promotion opportunities. For females, no similar effect was found. (e) Participation in PROBECAT increases the monthly earnings of male trainees, and this effect varies systematically by level of schooling. The largest effects are found for males with 6 to 12 years of schooling whose monthly earnings following training show increases of between 28% to 37%. A portion of this earnings effect is due to increased weekly hours worked. Training does not appear to raise the monthly earnings of women although there is some evidence of positive effects on hours worked that does not translate into higher monthly earnings. (f) On average, the monetary benefits of training outweigh the costs of the PROBECAT program for certain groups of trainees. Consistent with (a), the benefits associated with finding a job faster compensate for the costs of training for males with work experience, for those over age 25, and for females who had worked in the six months prior to training. When training time is added to time-to-first job and earnings effects are incorporated into the calculations, benefits outweigh costs within three months for these same groups. For all other groups, except those with no work experience, benefits exceed costs within a year. ;' Fuller details are given in Annex 3 (The Impact of Mexico's Retraining Program on Employment and Wages).  -7 - 14. The main lessons of substance from this component are that: (a) the costs of a retraining- cum-stipend program of the PROBECAT type can be significantly outweighed by the monetary benefits of graduates finding a job more quickly; (b) for PROBECAT graduates, prior work experience was a strong determinant for success in the labor market (this matches the experience of retraining programs in other countries); (c) particular attention should be given in the design of large retraining programs to creating mechanisms which encourage consistently optimal selection of trainees, taking into account the widely dispersed operative responsibilities typical of such programs; and (d) retraining programs should have a built-in evaluation mechanism which allows for continuous assessment of program impact; to be effective, this mechanism should be carefully designed to include a control or comparison group. 15. The Demonstration Inservice Training and Productivity Component, as implied by its name, was basically a pilot program albeit a substantial one. As shown in Part IIl, Table 6, the Inservice Training Program (CIMO) expanded to 30 Regional Units (UPCs) compared with the target of 2) in the SAR. CIMO has worked directly with over 32,304 individual separate enterprises and trained more than 124,182 individual workers through 10,644 training courses. This compares highly favorably with appraisal targets of 5,000 enterprises, 75,500 workers and 8,000 courses respectively. During its four years of existence, the average number of individual workers participating on each training course was 12 and an average of 3 individual enterprises. CIMO has enjoyed rapidly growing support from its target group, mainly SMEs, as evidenced by their increased financial contributions towards training costs and very positive evaluations of services rendered. Indeed, CIMO has developed into the leading program for technical support to SMEs in the country. In terms of substance, the program has evolved from a training-oriented focus to one of more integral support seeking to respond to the diverse needs of the target enterprises, including technical assistance in product development, marketing, business management and accounting. The character of broker/facilitator was however maintained; the UPCs role is not that of actually carrying out either training or production process improvements but to assist in mobilizing and organizing iupport from suitable providers including consultants, sister industries, suppliers, clients, or other related actors in the production chain. 16. Enterprise financing of the program. Initially, enterprises fmanced about 30% of the direct costs of training and the Government financed the rest. In 1991, the average contribution of enterprises ranged between 60-70% of the total costs of training and the Government financed the remainder. The financing of the program has thus been shared from the beginning between STPS and enterprises which paid a growing proportion of total costs over time. An analysis done by the Bank (Annex 3) showed the following results for 1991: (a) if only direct outlays for all program activities are counted, the total program cost in 1991 was US$8.1 million, financed 58% by STPS, 38% by enterprises, and 4% by training providers (through rebates on facility rentals, discounts, etc.); (b) if the time spent by workers in organized training activities is valued at the average wage of participants in the PROBECAT retraining program (one minimum wage, which is a very low valuation), the total cost rises to US$10.1 million financed 46% by STPS, 50% by enterprises, and 4% by training providers; and (c) if the calculation is made to include also the time of SME managers, supervisors, etc. spent with CIMO promoters and in self-assessment and evaluation activities directly  -8- tied to the program, and the cost of this managerial time is valued at a salary equal to that of the promoter (which again is a low estimate), the total program cost increases to US$12.7 million, financed 37% by STPS, 60% by enterprises, and 3% by training providers. 17. The above may underestimate the average enterprise contribution to overall costs because 1991 was a year during which the program still had very substantial and exceptional costs for an intensive training program for all UPC promoters. It can be safely assumed that the effective overall percentage of enterprise financing of the CIMO program will soon be in the range of 70-80%. 18. Evaluation of the CIMO Program. A study of Mexico's system for SME support and CIMO's role in this system was carried out as part of the preparation of the Labor Market and Productivity Enhancement Projecti'. The study concluded that: (a) CIMO's greatest strength is the close relation it has established with SMEs, at the enterprise level; and (b) the CIMO Program can contribute substantially to fill some of the gaps in the SME support system, and do so at a very modest cost. According to the report, some of these gaps and the way the program's interventions fill them are as follows: (a) CIMO's local executive committees provide a way to work closely and directly with enterprises' organizations and the private sector at the local level; (b) CIMO's promotion methods bring it closer to business leaders than those of other agencies, this includes cost-sharing from the beneficiary enterprise thereby enhancing sustainability (under the Labor Market and Productivity Enhancement Project this process will be strengthened with the eventual transfer of all such costs to the private sector); (c) CIMO undertakes diagnostic and business development consulting activities; (d) CIMO maintains rosters of training and consultant resources available to SMEs, which could form the basis of an information system for SMEs; and (e) CIMO demonstrated ability to reach a large number of enterprises in a short time, using a very light administrative structure. 19. Cost-Benefit Study. A cost-benefit evaluation of 30 cases of individual enterprises participating in CIMO program carried out in 1992, concluded that, the enterprises have had productivity increases, and some other benefits associated with labor conditions and organization, growing access to improved production processes, and in some cases, a better access to markets. This exercise also highlighted the need to design a systematic methodology for data collection and evaluation under the new project. 20. Lessons of substance: The following lessons can be drawn from the CIMO program: 4' Maza, Antonio, Evaluation of Support Mechanisms to Small and Medium Sized Enterprises ia Mexico, April, 1992.  -9 - (a) many SMEs in most regions of Mexico, and probably in most countries, are in critical need for assistance of the type provided by CIMO; this includes help both to arrange training and to identify agents who can help with other problems affecting productivity; (b) having the support from and participation of industrial and business associations for program activities is critical to the success of this type of program; SME participation in training or technical assistance program design, their contribution of qualifled staff as trainers, or technical assistance providers, and their selection of agents ensures private sector involvement in all aspects of the program; (c) training alone is seldom the only problem that needs to be addressed; SME support must be able to make at least a first-level diagnosis of a range of problems such as product quality, marketing, accounting and general business management; (d) program promoters are key to the success of SME support programs, thus, careful selection, compensation and training of promoters is required; and (e) CIMO appears to be effective in increasing productivity and competitiveness at modest cost, under current conditions in Mexico. 21. The Institutional Strengthening Component has: (a) expanded STPS's program of labor market surveys (6 surveys were completed and 1 is being carried out) and studies (out of a total of 17 studies, 4 were published, 11 have been completed, 1 is being carried out, and I was canceled). All survey results and study findings and recommendations were discussed between the Bank and the Government; (b) trained STPS staff (902 from DGE and 139 from other areas of STPS); (c) provided computers and software to the State Employment Service Offices of the 31 State capitals, of 14 Political Delegations of the Distrito Federal and the Employment Offices of Departamento del Distrito Federal (general directorates of STPS, State Employment Service offices in State capitals and in the Mexico City metropolitan area, and all STPS' state delegations); and (d) supported the development of a computerized market information system that comprises 17 different modules, of which six are in operation, 10 are being tested, and one is being programmed. This system will become fully operationalized in the follow-up project. 22. This component has had a substantial impact, at modest overall cost (US$ 6.3 million) in: improved access to information; improved analytical and policy development capabilities; and productivity increases in the DGE due to training and automation. The development of a computerized market information system allowed for the use and analysis of data obtained by STPS and from other institutions, such as INEGI and SEP, to obtain accurate and updated information on the labor market. This information, in turn, has been used for decision-making and policy development. The labor market surveys and studies conducted with project financing also served to determine labor market issues in specific industries and regions. These are being used to direct policy-making in STPS. Studies are being published for wide distribution. Through the training of staff and introduction of computers, the institution has been able to improve its productivity and, in combination with the availability of updated information, was able to develop its analytical and policy development capabilities. The project greatly contributed to strengthening of the DGE, however, the institution's analytical capabilities need further strengthening.  - 10- 23. Lessons of substance: The following lessons can be learned: (a) a labor market information system should be part of most similar operations; (b) when the Bank is called upon to review and comment on major surveys to be carried out by Borrowers, it is cost-effective for it to involve specialists (internal or external) in the subject matter covered by each survey to review the survey questionnaires and ensure that the greatest possible benefit is drawn from such surveys; and (c) systematic and continuous upgrading of Borrower staff's knowledge and skills to keep abreast of new developments and analysis methods in their fields is of the utmost importance for the Borrower's institutional strengthening and the sustainability of the programs supported by the project. 24. The Training Institutions Upgrading Component has been successful in increasing training capacity in specialties in high demand and in new specialties, and in improving the quality of training and administrative efficiency in 445 participating training institutions. At appraisal the target was to strengthen 500 institutions, this was later modified to 1,000 specialties; by project closing 1,374 specialties had been strengthened. The program has been received very positively by the staff of participating institutions, and has provided strong motivation for improvement of training both by selecting equipment based on local demand, and through continuing supervision of equipment use. A total of 1,374 different training programs benefitted a total of 134,000 trainees enrolled in pre-service training courses in 1991/92, plus an additional 42,647 trainees who paticipated in inservice training courses and 24,217 retraining program participants. Evaluations of staff performance and feedback from training institutions demonstrate the effectiveness of this training equipment in increasing the quality of the courses offered. It has actively catalyzed the development of private training capacity by devoting its entire fourth stage of equipment procurement to CIMO-supported training centers operated by private enterprise groups, and to strengthening the linkages between the training provided by both private and public centers with the needs of the directly productive sectors. 25. While no strict evaluations were planned or made of the upgrading program's cost effectiveness, the main objective of improving capacity and utilization of existing training institutions was met. Enrollment statistics show that project-supported training institutions and programs had a 18.7% increase in enrollment in the 1988/91 period compared to a 8.4% overall increase in enrollment in all comparable public sector institutions. The program had operating costs amounting to about 15% of investment costs necessitated by elaborate procedures for identification, selection, procurement, and distribution of small amounts of equipment to several hundred locations, and for program supervision activities. 26. Lea= Learned The main substantive lesson of this component is that provision of marginal quantities of high priority training equipment to existing training institutions is cumbersome and requires elaborate procedures and continuous supervision, but is feasible and can provide strong motivation among teachers and administrators to improve the capacity and utilization of existing training institutions. G. Project Sustainablilt 27. Through its institutional strengthening components at the federal and state levels (staff training, labor market information systems, a series of 16 substantial labor market studies, strengthening of employment services, upgrading of training institutions) the project has undoubtedly had long-term beneficial effects through self-sustaining improvements in institutional capacity and operational efficiency. At the present stage, it is difficult to determine exactly how sustainable the project's two major programs, labor retraining and inservice training support, will eventually turm .t-  - 11- to be. The main risks that may affect long-term sustainability would seem to be a possible decline in Government commitment to these programs and corresponding reduced budgetary allocations, although these risks may be mitigated if these programs continue to show positive impact as demonstrated by the results of PROBECArs recent evaluation, and increasing participation of enterprises In cost-sharing in the CIMO program. The follow-up Labor Market and Productivity Enhancement Project includes modified and more diversified versions of both programs, and its outcomes will provide a firmer basis for a judgment on long-term sustainability including the impact of cost-sharing between Government and the private sector. Under the new project, sustainability of the retraining program will be enhanced through increasing its cost-effectiveness as a result of improved targeting. The sustainability of the CIMO program will be enhanced through increased private sector financial contributions. In the short to medium term both programs are seen by the Goverment as being of high priority, and strong political support is expected to continue for the duration of the proposed new operation. H. The Bank's Performance and Lessons Learned 28. General. On the whole, the Bank performed well from the project's initiation during the subsector study, through implementation. There were occasional delays in contract approvals particularly during the initial phase of implementation; these were largely eliminated through a streamlining, in accordance with Bank procurement guidelines, of approval procedures for consultant contracts. In the area of equipment procurement, some delays became inevitable in the context of an alignment of ICB documents initiated by the Bank; this did not substantially delay implementation and had the advantage of mutually approved, standardized bidding documents now being available for use in new projects. The Bank's main strengths were the continuity of staff during supervision and the intensive supervision efforts, particularly during the first two years of project implementation. The Bank's main weaknesses were: (a) not involving specialists at the outset for a careful review of survey questionnaires and designs for the computerized information system, and (b) attempting to evaluate the impact of the PROBECAT program without an adequate control group. 29. The Bank's Role in Proiect Imlementation. During project implementation, thanks to consistently efficient leadership in STPS, Bank staff were able to play a supporting and facilitating role. Frequent supervision visits and constant telephone communication helped resolve implementation difficulties at very early stages. The project's mid-term review provided an excellent opportunity to look in-depth at the project's progress and discuss adjustments to improve project management and implementation. An open and flexible attitude on both sides helped resolve a multitude of issues which inevitably arise in the practical realization of such a complex and innovative operation as this has been. 30. The Retraining Evaluation Study. Difficult issues arose only in connection with one project- related activity which was not strictly part of the project as appraised, namely, the economic evaluation of the labor retraining program which was carried out as a regional study by the LAC Technical Department (TID). This study emerged as a LAC TD managed activity after the 1987 Reorganization, after the project was negotiated. The fact that the study was designed at the Bank's initiative by a consultant who, though eminently qualified, had no prior involvement with the project, may have created certain apprehensions in Mexico concerning the Bank's motives and the relevance of the design of the study. In practice, the study drew on data that were collected under the project's monitoring system. Additional data were obtained with the cooperation of STPS. The evaluation  - 12 - effort was constrained by the absence of precise wage information and of a control group that would allow the effect of training to be convincingly determined. Given this limitation, the impact of training was estimated by comparing the post-training experiences of trainees with those of deserters. The results of this analysis were published as a Bank Working Paper s. STPS agreed to its internal ci. culation in the Bank, although there were lingering concerns concerning the ultimate relevance of the study, the results demonstrated that trainees not meeting selection criteria resulted in very low rates of return while targeted trainees produced benefits far greater than the costs, thus calling for the application of strict selection criteria. (A modified evaluation in the context of the preparation of the Labor Market and Productivity Enhancement Project aimed at overcoming some of the methodological issues reconfirm these conclusions, as described in para. 13 above, and is attached as Annex 3). 31. There are three reasons to raise the matter of the regional study in this PCR. First, the concerns raised by the implementation team with regard to the study caused frequent discussions during supervision missions, causing substantial loss of valuable time intended for support to the project itself. Second, a lesson to be learned is that a carefully designed monitoring and evaluation system should be planned from the outset with adequate provisions for specialized technical assistance. A study should preferably be integrated into, agreed upon and negotiated together with country authorities from the beginning to ensure that everyone involved agrees on the purpose and benefits of the study. Third, in dealing with more advanced countries such as Mexico, it is particularly be desirable to promote collaboration and joint analysis between the Bank and a relevant agency in the country in question. This would have an effective impact on institutional development. The handling of the subsector study in 1986 (para. 5) was very different by comparison; it was carried out as a joint venture by several Government agencies and the Bank and it was both published as a major STPS report and as a Bank subsector memorandum. 32. Lessons Learned. Based on the above, the following are lessons for the Bank to consider: (a) when there exists a mutual interest (Borrower and Bank) to carry out studies or evaluation to increase or deepen general understanding of the impact of a project, such studies or evaluations should be included as part of the project design as was done in this case, separate evaluation exercises outside the scope of the project (paras. 30-31) can cause confusion if the implementing agency is not fully involved; and (b) the Bank may wish to promote joint preparation and publishing, with Borrower country agencies, of studies based on country supplied data, whenever feasible to assist other member countries (para. 31). L The Borrower's Performance. and Lesson Learned 33. The Borrower (NAFIN) and the Executing Agency (STPS) played a major role in carrying out the initial subsector study, as well as in fbrmulating project objectives and determining project scope and implementation procedures. The implementation organization consisted essentially of the Directorate General of Employment (DGE), assisted by the State Employment Services and a number E *Mexico Reraining Progran: Poverty Alleviation and Contribution to Growth-, LATHR, August 1991 (Report No. 6 of the LAT Regional Studies Program).  - 13 - of other Directorates and agencies. DGE has been strengthened through staff training and contracting of fixed-term consultants to perform a variety of implementation tasks. 34. The implementation organization described above has functioned well and has ensured competence, commitment, and continuity in project management. The excellent implementation performance of this complex project attests to the exceptional quality of STPS management, including at the highest levels. The workload of the management team notably at the Director General and Area Director level, but also at lower levels has been extremely high throughout the implementation period. Whether this model of project management could be successfully replicated in other operations would depend to a large degree on the availability of similarly competent, devoted, and enduring professionals for the key implementation team. 35. Lessons Learned. The main lessons learned in this context are: (a) the critical importance, especially for complex and innovative projects, of having in place a highly competent and committed management team which should preferably be deeply involved from the beginning of sector work and project definition; (b) the feasibility, if (a) above is possible, of implementing large and complex projects within the existing framework of a Government agency, complementing staff with local consultants. It is important to note that no project implementation unit was created for this project, thus the programs supported and the capacity building provided, contributed directly to the institutional strengthening of a major government ministry leading to a sustainable development impact; and (c) the paramount importance of thorough project preparation in full collaboration between Borrower and Bank Staff. J. Project Relationshipg 36. The relations between relevant Mexican agencies and staff and the Bank and its staff, as well as among the Mexican authorities themselves, have been excellent throughout the eight years which have elapsed since the initial subsector study began. The STPS leadership and staff, as well as those of NAFIN and SHCP, have been unfailingly supportive and cooperative. The only item which caused some strain in relationships was the retraining evaluation study mentioned in Section H, initially conducted without adequate consultation with STPS. However, due to the mutual trust developed between the teams on both sides, this did not substantially harm project implementation. K. Consultant Services 37. Consultants, mainly Mexican professionals contracted individually by STPS under procedures agreed with the Bank, have provided a substantial complement to Secretariat staff for project implementation. The performance of these consultants has been generally very good, and has permitted the implementation of major programs much as the inservice training component without expanding permanent STPS staff (in fact, STPS staffing has been sharply reduced during project implementation as part of the Government's general public sector reform program). Local private and public institutions were contracted to do surveys and studies, to assist with the procurement process during the first two years of implementation, and to help initiate and manage the CIMO  - 14 - program. Some of these institutions and firms contributed to strengthening STPS since they worked very closely with STPS staff and transferred knowledge and skills that allowed STPS to take over the tasks when the institution's contract was over. Expatriate consultants, selected by the Government, were also used, for instance, to provide training for STPS staff where local consultants with appropriate skills were not available or where international experiences and comparisons were highly germane. Their performance was also very good. L. PtRoe Dockmentation and DAta 38. Lega Agr ents. The Legal Agreements for the project have been satisfactory; there have been no major legal issues. However, in hindsight, one provision in practice temporarily caused sub- optimal concentration of implementation efforts on items of relatively low urgency, namely the provision in Section 3.06 of the Guarantee Agreement (in its original wording) that 150 training institutions had to be selected for upgrading before December 31, 1987 (Part III, Table 8). The lesson here is that the Bank should be cautious about proposing dates for component implementation during project implementation unless they are crucial for the project's success and there is a good chance that they will be met. 39. Adequacy of the SAR. The SAR was well balanced and focussed on key project issues of relevance for project implementation. 40. Availability of Data for the PCR. Due to the well designed systems for project monitoring, no major problems were encountered in compiling the necessary information for inclusion in the PCR. Project records and documents in the LAC Information Center were complete and easily accessible.  - 15- PART H. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE- A. Accuracy of Information Contained in Part III 41. The information contained in Part HII was prepared jointly by the Bank and STPS based o;a progress reports prepared for the project. These reports were thoroughly discussed by both institutions. Thus, there is full agreement on the veracity and accuracy of information included in Part III of this PCR. B. AnalysTs of Part I 42. The analysis in Part I includes the most significant aspects of project implementation and a number of elements that would permit the improved formulation of new projects with similar orientation. The analysis could also help improve the follow up and support provided by the Bank to improve efficiency and effectiveness in the utilization of loan resources as well as Government counterpart resources. C. Evaluation of Bank's Performance during Project Preparation and Implementation 43. During the preparation and implementation of the Manpower Training Project there was open and honest communication between the Bank and Mexican authorities working on the project. Regarding the Employment Services and Labor Retraining component, the Bank's performance was very positive, although it would have been even better if the Bank had shared with STPS similar experiences developed in other countries. As far as the CIMO program is concerned, there was a great willingness on the part of the Bank to support the various requests made by the Mexican Government, particularly in the following areas: (i) changes to the basic monitoring indicators for the component; (ii) accepting coverage of new sectors and increasing coverage of training programs to staff of all levels within a company; and (iii) authorizing the contracting of consultants for specific tasks or programs. 44. Also, the agreement reached by the Bank and the Mexican Government on a set of standard bidding documents for the procurement of goods was very important for the training institutions upgrading component that provided complementary equipment to training centers. Once an agreement was reached there were no major problems with these procedures. 45. Regarding the Institutional Strengthening component, it is worthwhile to mention the importance of the systematization and generation of statistical information to improve knowledge on project implementation results and to learn about its impact. To attain this, the upgrading of staff skills and knowledge about the labor market was essential. 46. As indicated in Part I of this report, it is important that when the Bank decides to publish reports or project implementation results, this should be done jointly with the Mexican authorities, avoiding a one- sided decision on this matter. F' This is an unofficial translation.  - 16- D. Lons Learned during Proiedt 1mplementation 47. One of the factors for the success of the project was the experience and high technical level of Bank staff assigned to the project, as well as continuity of the staff throughout the project implementation period. 48. The Bank staff knew the project in depth which resulted in timely and substantive recommendations and adjustments that benefitted the project. 49. The Bank was able to verify that the success of the project was due in part to the excellent coordination among government and private institutions that participated in the project. 50. Bank staff observed that project objectives were reached because of STPS's knowledge of sector problems that needed attention and of the selection of appropriate mechanisms that were put in place to meet the objectives. E. Evaluation of the Borrower's Performance during Project Preparation and Implementation and Lessons Learned. 51. The Borrower's performance during project preparation and implementation was satisfactory. 52. With regard to the Employment Services and Retraining component, the performance of the Mexican authorities was good. The established targets were surpassed. 53. In the case of the CIMO component, through the project the Mexican authorities were able to play a role of program promoter that, without doubt, is in agreement with the current policy of modernization. 54. -1- CIMO program in particular was able to create enterprise interest in the program through the developmen;t oJf activities that linked competitiveness with a full range of training programs for the enterprise. This opened a new opportunity for further development of the program. 55. As far as the Training Institutions Upgrading program is concerned, we consider that equipment procurement must begin with a detailed analysis based on the expected objectives that equipment distribution needs to meet. Therefore, it is not recommended that equipment distribution targets be set for the early part of the project implementation period for administrative reasons.!' F. Evaluation of the relationship between the World Bank and STPS 56. The relationship between the Bank and STPS has been cordial and respectful. As the project began implementation, the relationship grew closer resulting in visits, originally planned as supervision missions, that became working meetings in which technical assistance was provided. 57. On the Bank's part, there was permanent willingness to make adjustments to the project in accordance with STPS requests, to adapt it to changes in the country's economy and policies. 2' At appraisal, it was agreed to complete selection of and commence procurement for the first phase of 150 training institutions by December 31, 1987. The Borrower found it difficult to meet this deadline for administrative reasons related to government procurement policy.  - 17 - 58. During the missions sent by the Bank, there were meetings not only with offices at the central levels, but also with those working in the different components of the project at the local levels throughout the country. 59. The working meetings that the Bank had with State Employment Services and with UPCs, implementing agencies of the first two components at the local level, allowed for a more direct contact with the project's operations and with the problems being dealt with. 60. Field visits were very productive because they offered the opportunity to learn about the project results from the companies involved. Contact was established jointly with STPS, with company owners in diverse regions in the country and in diverse economic activities. This provided feedback to the project. G. Evaluation of Cofinanciers 61. During field interviews it was possible to verify that there was an important participation of the private sector, particularly in the CIMO program. Since +he program was based on demand by enterprises and on their needs they directed and approved the work programs developed by UPCs. In addition, enterprises financed in a gradually increasing proportion all actions that were developed through the program. 62. The financial participation of enterprises was only partially covered when compared to the original plan; however, a tendency of increasing this participation permanently can be observed. 63. In the case of the Employment Services and Retraining component, State Governments participated through financial contributions and by hiring some of the staff of the State Employment Services. The State Governments also improved the working conditions of technical staff and provided some office equipment. 64. Both the enterprises as well as the State Governments supported the project by increasing their financial contribution as a result of implementation of activities that benefitted the enterprises and the regional labor market actions.  - 18- PART III: STATISTICAL INFORMATION A. Related Bank Loans Table I: IBRD LOANS RELEVANT TO THE PROJECT LOAN TITLE YEAR OF PURPOSE STATUS APPROVAL Ln. 2042-ME 1981 A technical training project to support the Successfully (CONALEP 1) first phase of CONALEP's (Colegio implemented Nacional de Educaci6n Profesional - National System for Vocational and Technical Education) development program. Ln. 2559-ME 1985 To assist CONALEP in implementing its Successfully Second Technical second phase program by: (i) improving implemented Training Project the operational efficiency and (CONALEP II) effectiveness of CONALEP; (ii) increasing the supply of skilled workers and technicians by expanding CONALEP's training capacity; (iii) improving the quality of CONALEP's construction; (iv) developing an adequate maintenance system and explore other cost reduction measures; and (v) providing flexible support for the program as a whole by facilitating the development of strategic training options and institution building. Ln. 3358-ME 1991 To improve the quality, efficiency and Proceeding well Third Technical relevance of the CONALEP system by: Training Project (i) producing skilled manpower and small (CONALEP III) business services required for the restructured economy to sustain and strengthen growth; and (ii) contributing to the development, in the medium term, of a more rational and efficient education and training system in Mexico.  - 19 - LOAN TITLE YEAR OF PURPOSE STATUS APPROVAL Ln. 3542-ME 1993 The objective of the project is to assist Proceeding Labor Market the Government of Mexico in (i) well & Productivity increasing the productivity and Enhancement competitiveness of micro, small and Project medium-sized enterprises; (ii) reducing costs incurred by employees and employers of hiring and job search, and providing education and training opportunities for displaced and unemployed workers, with special attention to women; and (iii) improving the availability, timeliness and dissemination of labor market information and, more broadly, the capacity to monitor labor market changes and to design, evaluate and implement relevant policies and programs in the sector.  - 20 - B. re i Timdeable Table 2: PROJECT TIMETABLE TrEM PLANNED | ACTUAL DATE DATE Identification 05186 05186 Preparation 1 10/86 10/86 Preparation IT 02/87 02/87 Pre-Appraisal 04/87 04/87 Appraisal 10/86 05/87 Negotiations 04/87 08/87 Board Approval 05/87 10/87 Loan Signature 10/87 10/87 Loan Effectiveness 10/87 10/87 Loan Closing (Projected) 12/93 06/93  - 21 - C. Loan Disbursements Table 3: CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (US$ Million) F PISCAL YEAR JUNE JUNE JUNE JUNE I JUNE JUNE 1988 1989 1990 1991 1992 1993 Appraisal Estimatey' 7.5 16.0 32.0 48.0 64.0 78.0 Actual 6.0 21.7 38.2 59.7 75.0 80.0 Actual as % of Estimate 80.0 135.6 119.4 124.4 117.2 102.6 Date of Final Disbursement (projected) 05/31/93 Table 3a: CUMULATIVE ESTIMATE AND ACTUAL DISBURSEMENT ACCORDING TO DGE DATA (US$ Million) ENDYEAR: OC -DEC | DEC DEC | DEC | DEC | DEC |TOTAL -^ : 187 188 189 90 91 92 93 Estimate 0.0 8.0 8.0 16.0 16.0 16.0 16.0 80.0 Actual 5.1 5.7 14.7 15.9 23.9 14.7 0.0 80.0 Actual as % of Estimate n.a 71.3 183.8 99.4 149.4 91.9 0.0 100.0 1J Appraisal estinate adjusted to actual date of Loan approval (October 6, 1987).  - 22 - TIME LINE OF PLANNED AND ACTUAL CUMULATIVE DISBURSEMENTS By iscal Year US$ Million 100.0 80.0 --.-----------.-----.78 . B0. 60.0-______________________ < > _54>________ 40.0 - --------------- --------------- 20.0 -______ --------------------------------- 6.0 16.0 6/88 6/89 6/90 6/91 6/92 6/93 9/93 U Appraisal Estimate - Actual  - 23 - D. Project Costs and Financing Table4; PROJECT COSTS ESTIMATED COSTS ACTUAL ACTUAL COSTS COSTS AS (Dec. 31, 1992) % OF ESTIMATED PROJECT LOCAL FOR- TOTAL ACTUAL COMPON. EIGN COST (FINAL) _____ ~TOTAL Employment 74.1 1.8 75.9 85.4 112.5 Services and Retraining Demonstration 40.4 2.3 42.7 30.6 71.7 In-Service Training and Productivity Institutional 2.0 0.6 2.6 6.3 242.3 Strengthening of STPS Training 1.7 8.3 10.0 23.2 232.0 Institutions Upgrading Total Base 118.2 13.0 131.2 Costs Physical 11.8 1.3 13.1 Contingencies Price 11.0 0.7 11.7 Contingencies TOTAL 141.0 15.0 156.0 145.5 93.3 PROJECT COSTS  - 24 - Table S: PROJECT FINANCING (JS$ MILLON) .:a. Enterprises 40.3 16.0 39.7 Government 35.7 49.5 138.7 Bank 80.0 80.0 100.0 TOTAL 156.0 145.5 93.3 Comments: The deviation from appraisal esfimates in the financing shares of Enterprises and Government is explained in Part I, Para. 9.  -25 - E. Prylect Results Table 6: DIRECT BENEFITS INDICATIOR ESTIMATE ACTUAL ACCOMPLISHM D (12/31/92) ENT AT ACTUAL APPRAISAL DIVIDED BY ESTIMATE (%) A. Employment Services and Retraning 1. No. of SEE1' Staff 400 953 238.3 Upgraded 2. No. of Trainees 160,000 293,317 183.3 Awarded Stipends and Trained 3. No. of Trainees 8,000 7,739 96.7 Participating in Follow- up Study 4. No. of Training Centers 615 741 120.5 Used2' 5. No. of Courses 8,000 19,939 249.2 Conducted 6. No. of Enterprises 2,160 1,078 49.9 Participating in *Mixed"#- Retraining Courses 7. No. of Annual Surveys 4 5 125.0 of Expenditures on "Mixed" Retraining Courses 1' State Employmnit Service V Annual Aveage. -v Retaining under Cost-Sharing Arrangements with Enteprises.  - 26 - INDICATOR ESTIMATE ACTUAL ACCOMPLISHM D (12/31/92) ENT AT ACTUAL APPRAISAL DIVIDED BY ESTIMATE (%6) 8. No. of Trainees 24,000 14,148 59.0 Awarded Stipends for 'Mixed" Retraining Courses B. inservice Training 1. No. of UPCs- 20 30 150.0 Operating 2. No. of Training Courses 8,000 10,644 133.0 Conducted in Institutions 3. No. of workers trained 75,500 212,380 281.3 by Institutions and In- Plant 4. No. of Enterprises 5,000a/ 77,668 1,553.4 Participating in Training 5. Annual Survey of 4 5 125.0 Expenditures on In- Service Training Under the Project by Participating Enterprises 6. Enterprises Reached 20,000 31,211 156.1 through Seminars and Other Outreach Services C. STPS Institutional Strengthening 1. No. of STPS Staff 100 1,041 104.1 Upgraded 2. Improved Manpower 1 1 100.0 Information System Operating 3. No. of Studies 1 17 1,700.0 -f Regional Imsenrice Training Promotion Units.  - 27 - INDICATOR ESTIMATE ACTUAL ACCOMPLISHM D (12131192) ENT AT ACTUAL APPRAISAL DIVIDED BY ESTIMATE (%) D. Upgrading of Training Progr&m 1. No. of Training 1,000 1,374 137.4 Programs Selected for Upgrading b/ 2. No. of Programs 1,000 1,374 137.4 Receiving Supplemental Equipment b/ a/ Many enterprises and workers participated in more than one consecutive training activity. The number 212,380 represents the number of trainee courses; the actual number of individual workers who participated was 124,182. The number 77,668 is the total number of training activities with enterprises; the number 32,304 is the actual number of individual enterprises. b/ Pursuant to an amendment to the Guarantee Agreement, dated April 24, 1990, these indicators were modified from a target of 500 training institutions to a more relevant target of 1,000 training programs (specialties). This became necessary because many training institutions were justifiably provided support for more than one program or specialty, in one or more locations, by participating in more than one annual phase of the program.  - 28 - Table 7; PROJECT STUDIES STUDY PURPOSE AS STATUS IMPACT OF DEFINED AT STUDY APPRAISAL Mid-Term Review Review project impacts, Successfully Led to partial propose orientation, and completed. reorientation, of specifically, review trends in project Bank/Government project cost- implementation sharing. especially for in- service training component; and will influence design of future projects. Other Studies (see Not anticipated at appraisal. Successfully Led to strengthened list in Annex 2) completed. policy formulation.  -29- F. Status of Covenants TAblg : COMPLIANCE WITH COVENANTS COVENAN | I DESCRIPTION STATUS OF . - . ;- I COMPLIANCE AGREEMENT SECT ION: 4.01 The Borrower shall: (i) have the Special Account Audited, for each fiscal year, in YES accordance with appropriate auditing principles consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not YES later than six months after the end of each such year a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; (iii) furnish to the Bank monthly certified statements of the YES Special Account; and (iv) furnish to the Bank such other information concerning the YES Special Account and the audit thereof as the Bank shall reasonably request. GUARNTEE AGREEMENT SECTION: 3.01 The Guarantor shall carry out the Project, through STPS, with due YuS diligence and efficiency, and in conformity with appropriate administrative, financial, economic and educational practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. 3.02 The Guarantor shall enter into the contractual arrangements referred to in YES Section 3.01 of the Loan Agreement with the Borrower. Except as the Bank shall otherwise agree, the Guarantor shall not ehange or fail to enforce any provision of such arrangements.  - 30 - COVENANT DESCRIPTION | STATUS OF { , . : . :,- :; ,, . , w I ~~~COMIPLIANCE 3.03 Except as the Bank shall otherwise agree, procurement of the goods and YES consultant services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 2 to this Agreement. 3.04 Unless the Bank shall otherwise agree, the Guarantor shall not modify the YES STPS Retraining program in such a manner which would materially and adversely affect the carrying out of the Project, or fail to comply with any of the provisions of such Program. 3.05 The Guarantor shall, through STPS until the completion of the Project: (i) cause CET to be regularly informed of the progress in the YES execution of Parts A and B of the Project; and (ii) take into account the views expressed by CET in carrying YES out such Parts of the Project. 3.06 The Guarantor shall: (a) not later than March 31 of each year: (i) select, in accordance with criteria acceptable to the Bank, YES the training institutions which will assist the Guarantor in carrying out Part A of the Project; and (ii) enter into appropriate arrangements with such institutions for YES the provision of such assistance; and (b) select, in accordance with criteria satisfactory to the Bank, the training programs to be upgraded under Part D of the Project as follows; (i) not later than December 31, 1987, the first 300 training YES programs; (ii) not later than December 31, 1988, an additional 400 training YES programs; and (iii) not later than December 31, 1989, the remaining 300 YES training programs. 3.07 The Guarantor shall establish and maintain the UPA not later than March YES 31, 1988. 3.08 The Guarantor shall cause at least five UPCs to be established not later YES than June 30, 1988, and the remaining UPCs to be established not later than March 31, 1989. 4.01 Financial Covenants:  -31 - COV.NAT 0DESCRITON STATUS OF I COMPLI[ANCE (a) The Guarantor shall maintain or cause to be maintained separate YES records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Guarantor responsible for carrying out the Project or any part thereof; (b) The Guarantor shall: (i) have the accounts referred to in paragraph (a) of this Section YES for each fiscal year audited, in accordance with generally accepted auditing standards and procedures consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not YES later than six months after the end of each year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) funish to the Bank such other information concerning said YES accounts and the audit thereof, and said records, as the Bank shall from time to time reasonably request; and (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditures, the Guarantor shall: (i) maintain or cause to be maintained, in accordance with YES paragraph (a) of this Section, separate records and accounts reflecting such expenditures; and .ii) ensure that such separate accounts are included in the annual YES audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate opinion by said auditors as to whether the proceeds of the Loan withdrawn in respect of such expenditures were used for the purposes for which they were provided. SIDE LEIER The Guarantor shall furnish to the Bank a report concerning the Project YES (10113/8fl and covering all of the items referred to in Section 9.07(a) of the General Conditions (Mid-Term Review - 01/01190).  - 32 - G. Use of Bank Resources Table 9: STAFF INPUTS STACGE OF PROJECT <STATA WEEKS> CYCLE HQ FIELD TOTAL Through Appraisal 42.5 33.5 76.0 Appraisal Through 20.0 0.0 20.0 Board Approval Supervision 22.5 47.8 70.3 (As of 12/31191) PCR 0.8 0.5 1.3 TOTAL 75.0 81.3 166.3  - 33 - Table Q.1 MISSIONS MISSION |MONT HjNO. OF SW IN | SPECIALTY PERFORMANCE TYPES Oi YEAR PERSONS FIELD | / RATING PROBLEMS Identification 05186 2 1.6 C,N n.a. Preparation 1 10/86 6 10.5 A,C,N,P,Q,R n.a. Preparation II 02/87 5 12.0 C,F,L,M,O n.a. Pre-Appraisal 04/81 2 2.0 A,C n.a. Appraisal 05/87 4 6.4 A,C,J,M n.a. Supervision 1 10/87 c/ 2 2.0 C,F 1 n.a. Supervision 2 05/88 5 7.0 C,F,G,I,K 1 n.a. Supervision 3 11/88 d/ 3 6.0 C,F,S 1 n.a. Supervision 4 01/89 2 6.0 C,F I n.a. Supervision 5 06/89 4 4.0 C,F,G,H 1 n.a. Supervision 6 11189 4 5.0 A,B,C,F 1 n.a. Supervision 7 07/90 3 7.8 A,B,C 1 n.a. Supervision 8 05/91 Il 5 10.0 A,B,C,D,E 1 n.a. Completion 03193 2 0.5 A,E I n.a. NAMs al A=economist; B=operations analyst; C=senior technical training specialist; D=labor statistics specialist; E=employment services specialist; F=technical education analyst; G=evaluation specialist; H=labor economist; I=educationand trainingunit chief; J=institutionaldevelopment specialist; K=vocational educator; L=management and in-service training specialist; M=project costing specialist; N=senior education planner; O=loan officer; P=manpower information systems specialist; Q=industrial and management training specialist; R=technical educator; and S=training organization and management specialist. b/ 1=problem free or minor problems; 2=moderate problems; 3/4=major problems. c/ Jointly with supervision mission of Ln. 2559-ME. d/ Jointly with supervision mission of Ln. 2559-ME. #L Jointly with Identification mission of Second Manpower Training Project. n.a. = not applicable.  - 34 - ANNEX I List of Documents Related to this Project Completion Report which are Available in the Prolect File 1. 'Reporte de Resultados del Programa de Fortalecimiento Institucional (PFI) del Proyecto de Capacitacidn de Mano de Obra" (STPS, 1992). 2. *Reporte de Resultados del Programa de Inversiones Complementarias en Centros de Capacitacioa (PICCC) del Proyecto de Capacitacion de Mano de Obra" (STPS, 1992).  - 35 - ANNEX 2 LIST OF STUDIES FINANCED UNDER THE PROJECT STUDY AUTHORS 1. Results of the Implementation of PCMO Despacho Mancera Hermanos y Cia. SC 2. Impact of Technology on the Modern Sector of the Universidad Aut6norna Metropolitana Economy U. Azcapotzalco 3. The Free Trade Agreement and the Labor Market Grupo de Economistas Asociados AC 4. Analysis of National Education System Flows Del Villar y Alonso Sc 5. Diagnosis of the Employment Situation in the Tourism CGAEE, S.C. y UCAPE Sector and its Need fbr Training l 6. Identification of Key Sectors in the Generation of Roque, Hern6ndez, Salgado Productive Employment in Mexico 7. Labor Market in the Export 'Maquiladora' Industry Colegio de la Frontera Norte AC 8. Job Turnover in the "Maquiladora" Industry in Colegio de la Frontera Norte AC Tijuana 9. Characteristics and Dimension of the Informal Urban Facultad de Economfa de la UNAM Sector and its Need for Training 10. Automation of the Information Flow within the Labor Sistemas Globales de Automatizaci6n Sector through a Computer Network SA de CV 11. Strengthening of the Documentation Center Investigaci6n,Comunicaci6n e Informaci6n para el Desarrollo AC (CIDAC) 12. International Migration Flows in the Mexican Maestros Rodolfo Casillas Ramires y Southern Border Manuel Angel Castillo 13. Migration to the Mexican Northern Border Colegio de la Frontera Norte AC 14. Methodology for Labor Force Projection in Mexico Roque, Hernandez, Salgado 15. Child Labor Mercedes Pedrero (CRIM-UNAM) 16. Mexican Informal Sector (1991) Clara Jusidman  - 36 - ANNEX 3 The Impact of Mexico's Retraining Program on Employment and Wages by Ana Revenga Michelle Riboud and Hong Tan NOVEMBER 1992  - 37 - In the mid-1980s, Mexico entered a period of economic crisis when rising world interest rates, falling oil prices and a refusal by external creditors to roll over Mexico's short-term debt put an end to expansionary policies. Against this background, the Government of Mexico established a retraining program in 1984 for unemployed and displaced workers (Programa de Becas de Capacitacion para Trabajadores, or PROBECAT). Its objective was to dampen the social costs of major economic restructuring and rising unemployment during this period of macroeconomic turmoil. In 1987, the PROBECAT program was incorporated into the Bank-supported Manpower Training Project, and its scope and coverage expanded. Since that time, PROBECAT has provided short-term vocational training to over 250,000 unemployed people--approximately 50,000 trainees per year. Although originally viewed as a transitional measure, the PROBECAT program is currently being considered for continuation over a longer period of time. Several reasons exist for this. The most important is concern about the impact of the proposed North America Free Trade Agreement (NAPTA) ona migration flows, especially from rural areas, and on unemployment. Second, while the adjustment process to date has taken place with relatively little impact on observed unemployment rates, sizeable labor reallocations between expanding and contracting sectors still remsin with further liberalization and privatization of the Mexican economy. The third reason is that the PROBECAT program is the only unemployment scheme currently in place in Mexico. In making decisions about the future of the PROBECAT program, policymakers will need information about the lmpact of retraining on target populations and the cost-effectiveness of the program. This report evaluated the impact of participation in the PROBECAT program on the post-training employment and incomes of trainees. We sought to address four questions: (i) what is the impact of training on post-training employment of trainees; (ii) does training increase the speed with which they move from unemployment to employment?; (iii) conditional on their finding employment, what effect does training have on monthly earnings, hours worked, and hourly wages of trainees?; and (iv) do the monetary benefits from program participation outweigh the costs of providing retraining? In answering these four questions, we compared the post-training labor market experiences of trainees with those of a control group--a matched sample of unemployed individuals who were eligible for, but did not participate in, the PROBECAT program. Since individuals are not selected randomly to Joln the training program, the evaluation methodology must account for any systematic  - 38 - differences in the attributes of trainees and the control group. Otherwise, group differences are likely to lead to biased estimates of program effects, because of sample selectivity, or because trainees are overrepresented in the data relative to their true weight in the unemployed population. Both kinds of methodological problems were addressed in our evaluation. Our evaluation also sought to estimate program effects for specific groups of trainees--by sex, age, schooling completed, prior work experience, and degree of attachment to the labor force--to provide policymakers with guidelines on specific groups of unemployed individuals who should be targeted for retraining. The evaluation was conducted using retrospective data on post-training experiences of the 1990 cohort of PROBECAT trainees, collected by the STPS in February 1992. For a control group, we developed a matched sample of unem- ployed individuals from the 1990-91 quarterly urban labor force surveys (ENEU). The two datasets permitted an evaluation of the PROBECAT program that substantially improved upon previous evaluation efforts. The earlier studies were constrained by lack of an appropriate comparison group (outcomes were compared for training completers and those who dropped out of training), and by relatively crude wage data (wage information was bracketed, and reported in reference to the minimum wage). Both of these limitations have been largely overcome in our evaluation. Our evaluation of the PROBECAT program yielded several main findings: (a) Compared to the control group, trainees on average tend to fild jobs more quickly. Participation in PROBECAT reduces the mean duration of intervening unemployment spell by 2.5 months for males, and by 1.9 months for females. However, these figures hide considerable variations across different groups of trainees. The strongest effects are for trainees over the age of 25 years: training reduces the duration of unemployment spell by 3.7 months for males and 3.7 months for females. Much smaller impacts are found for those age 25 and under. Training does not shorten unemployment duration for those without work experience. They have longer spells of unewployment than the controls. (b) Male trainees are more likely to be employed three and six moths after training than the controls. However, this effect does not persist: at twelve months, the probability of employment is the same for trainees and controls. Taken together with (a), the implication is that PROBECAT training shortens the time to first job, and thus increases the amount of time trainees spend in employment in the first year after training.  - 39 - (c) Female trainees with work experience are more likely to be employed three, six, and twelve months after program completLon as compared to the controls. However, those without prior work experience are less likely to be employed at comparable intervals after completing training. This finding suggests that many women without vork experience are being drawn into the PROBECAT program who otherwise would have remained outside the labor force. (d) Male trainees are more likely to find employment in large firms than comparable controls. Large firms are known to pay higher salaries, and provide more stable employment, more training and more promotion opportuni- ties. For females, no similar effect is found. (e) Training increases the monthly earnings of male trainees, but this effect varies systematically by level of schooling attainment. The largest effects (increases of 28 percent to 37 percent in monthly earnings following training) are found for males with 6 te L2 years of schooling. Some part of this earnings effect among males is due to increased weekly hours worked, possibly because they are more likely than the control group to find employment in large firms where monthly earnings and work hours are higher. For females, training does not appear to raise their monthly earnings. While there-is some evidence of positive effects on hours worked, this does not translate into higher monthly earnings for them. (f) The monetary benefits of training outweigh the costs of the PROBECAT program for certain groups of trainees. For some groups of male trainees (those with prior work experience and those over 25), the benefits of program participation outweigh the costs within 3 monhs of starting employment. For all other males except those with no prior work experience, the benefits outweigh the costs within gne_yea. Males with no prior work experience, on the other hand, spend the longest time in job search after training (8 months as compared to the trainee mean of 4.4 months) and benefit relatively less from training in terms of monthly earnings (128 thousand pesos as compared to the average benefit of 152 thousand pesos). For this group, the costs of training are offset only after 17 months of higher earnings upon finding employment. For women, we find that program benefits from earlier employment offset the costs for those with prior work experience and for those over 25 years. Although we do not find significant wage effects, for these women the program pays for itself. For other women, the costs exceed the benefits.  - 40 - I. INE&QDMGION Between 1950 and 1974, Mexico enjoyed a prolonged period of high growth, low inflation, and moderate accumulation of external debt. However, this era of economic stability ended when greater Government involvement in the economy resulted in growing public expenditures unmatched by revenues, and inflation and external debt became increasingly important sources of public finance. The pace of Mexico's economic growth remained rapid until 1982, when rising world interest rates, falling oil prices and a refusal by external creditors to roll over Mexico's short-term debt put an end to expansionary policies. The country then entered a period of declining per capita income, soaring inflation and balance of payments difficulties. The Government responded with a program of both fiscal and monetary austerity and accelerated structural reforms, which transformed Mexico into one of the world's most open economies and restored real per capita income growth. As a response to the economic crisis, in 1984 the Government of Mexico established a retraining program for unemployed and displaced workers (Programa de Becas de Capacitacion para Trabajadores, or PROBECAT). Its objective was to dampen the social costs of major economic restructuripg and rising unemployment during this period of macroeconomic turmoil. As adjustment efforts accelerated, the need for policies aimed at supporting the unemployed and facilitating their reemployment became more pressing. As a result, in 1987, the program was incorporated into the Bank-supported Manpower Training Project (Loan 2876-ME), and its scope and coverage expanded. Since then, the PROBECAT program has provided short-term vocational training to over 250,000 unemployed people, approximately 50,000 trainees per year. Although PROBECAT was originally viewed as a transitional measure, the Mexican Government is currently considering an extension of the program. There are several reasons for this. The most important is concern about the impact of the North America Free Trade Agreement (NAFTA) on migration flows, especially from rural areas, and on unemployment. Second, while the adjust- ment process to date has taken place with relatively little impact on observed unemployment--even in the worst years of the adjustment process, unemployment rates did not increase above 6.1 percent--substantial labor reallocations between expanding and contracting sectors are likely to occur with further liberalization and privatization of the Mexican economy. The third reason is that the PROBECAT program is the only unemployment assistance scheme currently in place in Mexico. In making decisions about the future of the PROBECAT program, policymakers will need information about the impact of retraining on target populations and the cost-effectiveness of the program.  - 41 - The purpose of this report is to provide an evaluation of the impact of program participation on the employment and incomes of trainees. We seek to address four questions: (i) what is the impact of training on the subsequent employment experiences of trainees?; (ii) does training increase the speed with which trainees move from unemployment to employment?; (iii) conditional upon employment, what effect does training have on monthly earnings, weekly hours worked, and hourly wages of trainees?; and (iv) do the monetary benefits from program participation outweigh the costs of providing retraining? In answering these four questions, we pose the counterfactual question: how do post-training outcomes differ from what would have happened had participants not received training? The approach we adopt is to compare the post-training labor market experiences of trainees with those of a control group--a matched sample of unemployed individuals who were eligible for, but did not participate in, the PROBECAT program. Since selection of individuals into the program is not random, the evaluation methodology must take into account any systematic differences between participants and non-participants; otherwise, these differences between groups could lead to biased estimates of the program effects. Our evaluation focuses not only on overall program effects, but also on the effects of the program on specific groups of trainees. We seek to determine whether, and how, training effects vary across groups of trainees with different demographic attributes, such as age, sex, level of schooling completed, prior work experience, or degree of attachment to the labor force. These results will be important for providing Nexican policymakers with useful guidelines on the specific groups of unemployed individuals who should be targeted for retraining. Previous PROBECAT evaluations have been constrained by several data and methodological limitations.11 Specifically, they lacked (a) a comparison group: outcomes (employment and earnings) for training completers six months out were compared to outcomes three months out for the group that failed to complete the training program ("deserters'); and (b) detailed wage data: earnings information was bracketed, and was only reported in reference to the minimum wage. Both of these limitations have been largely overcome in our evaluation. First, we have access to detailed data on the post-training experiences of the 1990 trainee cohort from a retrospective survey conducted by the Secretariat of Labor and Social Welfare (STPS) in February 1992. / Sam Carlson, Mexig Labor Retraininf Program! Poverty Alleviation and Contribution to Growth, LATHR Report #6, August 1991.  - 42 - Second, we have developed a control group for the trainees, using panel data on a random sample of individuals drawn from the 1990-91 quarterly urban labor force surveys (ENEU). We begin the report by providing a broad overview of the characteristics of unemployment in Mexico and of the PROBECAT program. We also describe several surveys that have been fielded to monitor the progress of trainees. We use these surveys, and data from the Urban Labor Force Survey (ENEU) to compare trainees and unemployed individuals that did not participate in training. This is followed by discussion of the methodological issues that arise in manpower training evaluations, and our approach to resolving them in this study. The next tvo sections report our estimates of the effects of training on probabilities of employment, time-to-first job, monthly earnings, hours worked per week, and hourly wage. In the concluding section, we summa- rize the most important findings, present estimates of the cost-benefit ratios of training for various groups of participants, and discuss the implications of these findings for the PROBECAT program and, more broadly, for other manpower training evaluation studies. II. UNEMPLOYMENT AND THE PROBECAT PROGRAM: BASIC FEATURES We begin by summarizing the main characteristics of unemployment in Mexico. Next, we describe the salient features of the PROBECAT program: its organization, the kinds of vocational training provided, and the criteria used to select individuals into the training program. Finally, we describe the data on PROBECAT trainees and a matched sample of unemployed individuals which we use for the evaluation. Background: Basic CharActeristics of Unemployment in mexico According to official unemployment statistics, the open unemployment rate in Mexico is quite low. In 1991, it stood at 2.8 percent of the labor force, and even in the worst years of the adjustment crisis, it did not rise beyond 6.1 percent. These unemployment figures, however, have a number of shortcomings. First, they refer only to urban unemployment. Second, they are based on a fairly loose definition of employment, which counts an individual as employed if he/she works at least one hour per week. Third, and most important, they include only those individuals who are actively searching for a job. However, research on a number of countries suggests that the distinc- tion between 'unemployed' and "not in the labor force" based on intensity of  - 43 - search is usually very weak.11 Our analyses of employment survey data for Mexico, confirm that, in practice, the distinction between these two catego- ries is very fuzzy for certain groups of individuals, implying that the official definition of unemployment tends to underestimate the true number of people who are in fact jobless.21 In particular, we find a large fraction of men who appear to be idle--these individuals are out of work, able to work, not studying and not taking care of the household. If these idle male workers are counted among the unemployed, the aggregate unemployment rate increases from 2.8 percent to 5.5 percent in 1991.k' Table 1 reports the distribution of unemployment by age and education categories. Using the standard definition of unemployment, we find that for men as much as 60 percent of total unemployment is accounted for by individu- als below the age of 25. The comparable fraction for females is even higher, at about 77 percent. Young workers are thus a very large fraction of the unemployed. As regards education, 53 percent of total male unemployment and 62 percent of total female unemployment corresponds to individuals with 7 to 12 years of schooling. Individuals with completed secondary education (9 years of schooling) account for 20 percent of total male unemployment and about 19 percent of total female unemployment. Those with high school ' education (10-12 years of schooling) account for an additional 20 percent of male unemployment and a stunning 35 percent of female unemployment. These figures suggest that utnemployment is concentrated among those with a certain level of education and not, as could be expected, among the least educated. However, this conclusion has to be modified when the alternative definition of unemployment is used. Taking into account those individuals who report being idle increases the fraction of males with less than secondary education in total unemployment. 2/ For a discussion of the importance of considering these "idle" workers as unemployed, see Kim B. Clark and Lawrence H. Summers, "Labor Market Dynamics and Unemployment: A Reconsideration", Brookings Papers-On Economic Aciviy 1979. Also Lawrence H. Summers, "Why is the Unemployment Rate so Very High near Full Employment", Brookings Papers on Economic Activity, 1986. ]/ See A. Revenga and M. Riboud, "Unemployment in Mexico: An Analysis of its Characteristics and Determinants", World Bank mimeo, 1992. i/ We do not define a comparable group of idle female workers because family responsibilities tend to make their labor market behavior patterns much more complex, with frequent periods out of the labor force.  - 44 - Program Features The PROBECAT program is administered through the network of state employment offices. Since 1987, it has trained a total of 251,181 unemployed persons and provided 9268 courses. During the training period, program participants receive a stipend equal to the minimum wage. Upon completion of the course, the local state employment office helps trainees find a job.l1 The majority of program participants enroll in classroom training, primarily in short-term vocational courses offered through contracts with local private and public institutions. Training is provided in several occupational areas: carpentry, construction, electricity, food preparation, graphic arts and design, handicrafts, machinery, mechanics, refrigeration, services and administration, shoe repair, textiles and apparel, and welding. In principle, courses are organized to respond to the needs of the local labor market, and are designed to redress local shortages of workers with particular skills. These needs are determined through periodic studies of local labor market conditions. Courses vary in duration from one to six months, with the majority of courses lasting three months. Not everyone is eligible to participate in the PROBECAT program. The selection procedure gives variable weights to different criteria, including the number of economic dependents, having attained certain levels of basic education, prior work experience, and having been unemployed for less than three months. The exact weighting scheme is quite complex and non-linear. Individuals with a total composite score exceeding a threshold level are eligible to join the program. In addition, participants must (in theory) be between the ages of 20 and 55, and be registered as a job-seeker at the local state employment office.11 This non-random selection of individuals poses potentially serious measurement problems for any evaluation of the PROBECAT program. Data Sources A number of surveys have been fielded to help monitor and evaluate the PROBECAT program. The first, comprising follow-up surveys of trainees 3 and 6 2/ The follow-up survey data suggest, however, that most trainees find jobs on their own and not through the state employment service. f./ The original age bracket was amended to allow a small number of partici- pants between the ages of 16 and 20. The follow-up surveys also show a few participants above age 55.  - 45 - months after program completion, has been used in several reports written by the STPS. A second, more complete retrospective survey, was administered to the 1990 cohort of trainees in February 1992. It elicited a wealth of information on all jobs held since completion of training until February 1992, including the start and end dates for each job, monthly salary, hours worked per week, occupation and industrial sector. Our evaluation is based on the second PROBECAT survey. As a control group for these trainees, we use a sample of unemployed individuals drawn from the 1990-91 quarterly urban labor force survey (ENEU). ENEU, a household-based survey of the sixteen main urban areas in Mexico, which elicits detailed information on employment status, jobs, monthly salary, and hours of work broadly comparable to the PROBECAT survey. ENEU uses a quarterly rotation system such that each rotation group (of households) remains in the survey for five consecutive quarters, and then leaves the sample. We obtained panel data for the rotation group that remained in the survey from the third quarter of 1990 to the third quarter of 1991--the same period spanned by the trainee data--and drew our control group from this sample. This control group includes all those who were unemployed in the third quarter of 1990 (who we then track for a year).1' For certain analy- ses, we will augment this control group with a second cohort who became unemployed in the fourth quarter of 1990 (and were not in the first cohort). For this latter cohort, only nine months of data are available. Table 2 presenats summary information on the demographic characteristics of our samples of trainees and controls. In 1990, the average PROBECAT male trainee was 28 years old, with the majority having completed primnry schooling 2/ See STPS, Reporte de Seguimiento del ProArama do Becas de Caacitacion para TrabaIadores 9t Segimint del ps-ama de Becas de CaDacitacion Rara Traba1adores 1989, and Reoorte de Seguimiento del Programa de Becas de Cagacitacion 2ara Trabajadores 1990 (preliminary). None of these reports include comparisons of post-program outcomes for trainees with those for a control group. I/ The original 3 month follow-up survey had been administered to 1,995 trainees, but it was impossible to track down 273 of these. Some basic consistency checks provided a match for 1,722 individuals. Four individuals included in the new 1992 survey were not part of the original one. 2/ As discussed earlier, we use two alternative definitions of "unemployed". Under the "standard" definition of unemployed, we include all those individu- als who report to be (a) out of work the previous week and (b) scarching for a job. Under the "alternative* definition of unemployed for males, we also include those who report to be (a) out of work the previous week, (b) able to work, and (c) not students or retirees, whether they are searching for a job or not.  - 46 - and some secondary education. About 41 percint were married. The average female trainee was 29 years old, with similar levels of education to males, and about 46% were married. Among those trainees who were unemployed at the time they entered the program, 74 percent reported having had previous work experience; the proportions are higher for males (85 percent) than for females (62 percent). Almost half of the men (45 percent) identified themselves as being household heads. It is evident from Table 2 that trainees differ from the general population of the unemployed. Compared to the controls, trainees tended to be slightly older, be married or the household head, have completed secondary school but not a higher education. Though not shown in Table 2, the trainee group also tended to include a higher proportion of women than the controls (51.4 percent versus 46.1 percent, respectively). III. THE EVALUATION METHODOLOGY In this evaluation, we are interested in estimating the impact of training on several outcome measures: (i) time taken to exit from unemployment (ie. time to first job); (ii) the probability of employment at three, six, and twelve months after the end of training; (iii) post-training monthly earnings; (iv) weekly hours of work; and (v) hourly wages. Analysis of such a wide variety of outcome measures departs from the traditional focus of most manpower training evaluations on the earnings impact of training, with relatively little attention paid to its impact on subsequent employment.121 We believe this approach provides a ihore complete characterization of program effects. For example, earnings comparisons are contingent upon having a job, and one impact of training may be to increase the likelihood of employ- ment.l1 Similarly, monthly earnings are the product of hours of work and hourly wage rates, and training may have very different effects on these two outcomes. A number of methodological issues arise in evaluating the impact of the PROBECAT program. The first issue is that of selectivilty bias. As Table 2 demonstrated, trainees are a non-random sample of the unemployed population. Failure to control for these differences in observed characteristics of trainees and controls can lead to biases in estimated program impacts. These J2/ An exception is David Card and Daniel Sullivan, "Measuring the Effect of Subsidized Training Programs on Movements In and Out of Employment', Economet- LJ&A, Vol. 56, No. 3, May 1988, pp.497-530. 1./ Card and Sullivan (1988) provide evidence that a large part of the measured training effect on earnings results from increases in the post- training employment of trainees.  - 47 - biases are potentially exacerbated by systematic differences across groups in unobserved (to the analyst) characteristics, such as motivation, ability, or tastes. A second, related issue arises because trainees are overrepresented in our data relative to their true weight in the population; they represent 74 percent of our data sample versus 10 percent in the total unemployed popula- tion in 1990. The oversampling of trainees, who have very different attrib- utes from other unemployed individuals, gives rise to estimates of program effects that are not representative of the underlying unemployed population. We address these methodological issues in several ways. Two approaches are used to control for selectivity bias. One uses PROBECAT's own selection criteria to define comparable samples of controls for the trainees. This involves first estimating a probit model relating the likelihood of program participation to the PROBECAT selection criteria for which we have data, such as marital status, number of children, dependents, schooling and time spent unemployed prior to entering PROBECAT, and then limiting the control sample to individuals with high predicted probability of program participation.."I This approach is adopted in the analysis of training effects on employment. A second approach, which we will use in the analyses of monthly salary, hours of work, and hourly wage, is based on the two-stage selectivity correction. procedure developed by Heckman (1979).2I This involves estimating a model of selection into PROBECAT, calculating a variable to capture the individual's likelihood of program selection, and including this variable as a regressor in the outcome models. The second issue arises when program effects are estimated without taking into account the overrepresentation of trainees in the data. The estimates are biased because these models give undue weight to the attributes of trainees that differ, often substantially, from those of the control group. This issue may be resolved by constructing choice-based weights to reflect the true relative proportions of both trainees and controls in the unemployed JZ/ A similar approach is followed in Westat, "Continuous Longitudinal Manpower Survey Net Impact Report No.1", Report prepared for the US DOL, 1981. Westat, "Summary of Net Impact Results", Report prepared for the US DOL, 1984. Laurie Bassi, "The Effect of CETA on the Postprogram Earnings of Partici- pants", Journal of HumanResource-s. Vol. 18, No. 4, 1983, pp. 539-56. And Vincent Geraci, "Short-Term Indicators of Job Training Program Effects on Long-Term Participant Earnings", Report for U.S. DOL, 1984. 12/ James Heckman, "SamPle Selection Bias as a Specification Error", Egonome- trica, Vol. 47, No. 1, 1979, pp. 154-61.  - 48 - population age 15-54 years.>/1 The population parameters of interest may be recovered by using these choice-based weights to estimate weighted models of program outcomes. IV. TRAINING EFFECTS ON ESPLOYMENT We begin the evaluation by assessing the impact of program participation on the likelihood of employment, both in the short-term and over increasingly longer periods of time. First, we ask if participation in training has any effect on the time it takes for trainees to move from unemployment into a first job. Next, we ask whether trainees differ systematically from the control group in their probability of employment at three, six, and twelve months after time 0. For trainees, this is the time since completion of training; for the control group, this is the time since we first observe them unemployed in the third quarter of 1990. Together, the two sets of analyses can be used to draw inferences about the proportion of time both groups spend in employment over the first twelve months. Time To First Job What is the impact of PROBECAT on time-to-first-job? For the trainee sample, it is straightforward to construct a measure of time-to-first-job (expressed in months) using information on the end-dates for training and the start-dates 'or the first job. For trainees that have not found a job within the sample period, we compute the time elapsed from training completion to February 1992, and code this spell as censored. Constructing a time-to-first job measure was more difficult for the control group. We have information on time unemployed up until the third quarter of 1990. However, we only observe their subsequent employment status at discrete points in time over a one-year interval, and must therefore infer time-to-first-job by appealing to steady state assumptions, or from individual transitions from one labor market status to another. We experimented with both approaches. First, we treat unemployment duration reported by the control group as being representative of the underly- ing distribution of incomplete unemployment spells. For each unemployed individual, we observe an incomplete unemployment spell. Under steady state Jl/See S. Lerman and C. Manski, "On the Use of Simulated Frequencies to Approximate Choice Probabilities", in C. Manski and D. McFadden (eds.), Structural Analvsis of Discrete Data, MIT Press, Cambridge, 1981.  - 49 - assumptions, we can infer a distribution of completed spells by simply doubling the duration of observed incomplete spells for each individual.-II A second approach is to exploit the panel nature of the ENEU data. By tracking individuals over time, we can identify the first quarter in which they find a job or, if they remain unemployed at the end of one year, we code the unemployment spell as being censored. However, knowing that the first job was found (say) after one quarter does not allow us to compute time-to-first- job. We therefore assume that the first job was found at the end, the middle, or the beginning of the interval. These assumptions correspond to adding 3, 1.5, or 1 month(s) to the incomplete unemployment spell reported in the third quarter of 1990. Both approaches, and all three assumptions, yielded similar results, namely, that time-to-first-job is significantly shorter for trainees than the control group. The results reported below are based on the second approach using the most stringent start-time assumption. We corrected for selectivity bias by applying to the control group the same criteria used to select trainees into the program. We first estimate an equation for the probability of selection into the PROBEC&T program, relating program participation to the criteria for which we have information--narttal status, number of children and economic dependents, schooling, and time spent in unemployment at the selection point. We then limit the sample of controls to "eligible' individuals who have a high predicted probability of program participation. All the employment results presented below are based on comparisons of the trainees with the selectivity-corrected sample of controls who were eligible for, but did not participate, in the PROBECAT program. Figure 1 plots survival curves for male trainees and controls using the raw duration data on time-to-first-job. These survival curves are defined as a function of time t (in months). They indicate the probability of remaining unemployed t months after entering unemployment. We present separate survival curves for those age 25 and under, and for those over 25 years old. They clearly show that trainees exit unemployment more quickly than do the con- trols: at three months, 62 percent of young trainees have left unemployment as compared to just 42 percent of controls. The difference is more marked for the older trainees; 72 percent of them have left unemployment within 3 months, versus 33 percent of controls. We estimate that the average duration of unemployment for male trainees aged 25 and under is 1.4 months shorter than that for controls; for trainees over 25, average duration of unemployment is 1D See Stephen Salant, Search Theory and Duration Data: A Theory of Sorts', Ouarterlyt JournaL of Economics, 1977.  - 50 - 3.7 months shorter than that for controls. We also computed comparable survival curves without the selection correction for the control sample. These yielded very similar results. Figure 1 also shows survival curves for young males, age 25 and under, both with and without previous work experience. Young trainees with work experience exit unemployment more quickly than the controls. However, for new entrants into the labor force, the patterns are quite different, with some trainees exiting unemployment quite quickly, but others remaining unemployed for a long time. About 39 percent of young trainees without work experience remained unemployed twelve months after training completion. In contrast, all young members of the control group without work experience exited unemployment at twelve months. Not surprisingly, we find that the average duration of unemployment for this group of trainees exceeds that for comparable controls by 1.5 months. With the exception of age categories, these graphical comparisons do not control for any systematic differences in the demographic characteristics of the trainee and control groups. These unadjusted comparisons may be misleading if unemployment duration is related to education level or other individual and household characteristics. li To address this potential problem, we esti- mate a cox proportional hazards model of unemployment duration using pooled trainee and control samples. This model decomposes reemployment probabilities (the hazard rate) into a function of time (which is the same for all individu- als) as well as other regressors. This regression approach allows us to investigate the impact of training on time-to-first-job, controlling for both individual and group differences in age, educational attaintment, prior work experience, and various household attributes. Table 3 presents the cox regression results for males. The estimated coefficient on the indicator variable for training is both positive and statistically significant in all cases, confirming the previous finding that PROBECAT trainees exit unemployment more quickly than do the controls. The size of this coefficient suggests that the average duration of unemployment for the control group is 30 percent longer than that for trainees. Figure 2 plots survival curves for female trainees and controls by age group. Like their male counterparts, female PROBECAT trainees appear to exit unemployment more quickly than female controls. At three months, 50 percent 16/ However, a parallel analysis of unemployment duration in Mexico suggests that only age and having economic dependents are likely to be of importance. See A. Revenga and M. Rtboud (1992).  - 51 - of female trainees aged 25 years and under have found employment, as compared to 32 percent of the control group. For the sample of young females, these differences disappear over the course of the first year: after nine months the survival curves for trainees and controls are virtually identical. For the sample of older women, the trainee-control difference increases over the year so that 75 percent of trainees have left unemployment after 12 months, as compared to 47 percent of controls. We also compared employment effects for women with different degrees of attachment to the labor force. If training is enhanced by initial skill or schooling endowments, we might expect training effectiveness to be diminished for women with low attachment to the labor force because of skill obsoles- cence. To explore this hypothesis, we distinguish between (1) the women that worked sometime in the six months prior to training, and (2) those who were without work for a longer period of time. Figure 2 shows the survival curves for these two groups of women. In both cases, the trainees fared better than the controls. However, trainees who recently left employment exit unemploy- ment after training more quickly than women who were reentering the workforce after a long inactive spell. Table 4 presents the results of estimating a cox proportional hazards model of unemployment duration for the pooled sample of women. They suggest that differences in exit rates between trainees and controls disappear once account is taken of individual characteristics. The coefficient on the training indicator variable is invariably close to zero; however, this result is due in large part to the unemployment effects of labor force attachment shown id Figure 2. When an interaction term between training and duration of prior unemployment is included in the cox model, the results suggest that women who entered training after a relatively short spell of unemployment exit more quickly than controls; those who entered training after a long spell out of the labor force exit more slowly. Emnloyment Probabilities Over Time We also compared employment probabilities of trainees and controls over progressively longer intervals of time. The ENEU reports the labor market status of the control group at three, six, nine, and twelve months after the third quarter of 1990 (when we first observe them). For PROBECAT trainees, we use start and end dates from their retrospective histories to define labor market status variables for comparable intervals of time after the completion of training.  - 52 - Table 5 presents, separately by sex, simple comparisons of the percent of trainees and controls employed at three, six, nine and twelve months. The figures suggest that trainees are more likely to be employed during the year following training than are the controls. For men, the difference is about 9 percentage points at three and six months, and 5 percentage points at nine and twelve months. For women, the difference between trainees and controls is somewhat smaller, averaging 4 to 5 percentage points over the year. These figures, however, are sensitive to the groups being compared. In Table 6, we differentiate between new labor force entrants and those with previous work experience. These figures suggest that training is much less effective for new entrants. Trainees with work experience are slightly more likely to be employed than the comparable control group at three months, but thereafter the difference between the two groups becomes negligible. In contrast, trainees without work experience are slightly less likely to be employed than the control group at three months, and they are significantly less likely to be employed at twelve months. A similar, but somewhat more pronounced, pattern is found for the female sample of trainees and controls. This example highlights the importance, in manpower training program evaluations, of controlling for group differences in demographic characteris- tics. As we noted earlier in the previous section on methodology, simple comparisons can be very misleading if trainees differ systematically from the control group. In this case, the critical difference between groups appears to be a greater representation of new labor force entrants in the control group. Group differences, that may be induced in part by program selection, are explicitly taken into account in the following analyses. We estimate probit models in which the probability of employment--at three, six, and twelve months--is related to age, schooling, prior work experience and unemployment duration, and an indicator variable for whether the individual participated in the PROBECAT program. The issue of selectivity bias is addressed using the same approach as in the analysis of time-to-first- job. We also estimate weighted models to account for the oversampling of trainees in our pooled data. The effects of PROBECAT on the subsequent employment probabilities of men and women are summarized in Tables 7 and 8, respectively. The regression results on which these figures are based are available upon request. First, consider the results for men. The unweighted regression model without selectivity correction suggests that training produces a weak positive effect on the probability of employment at three months, and a zero effect thereaf-  - 53 - ter. Selectivity correction strengthens these results: the corrected esti- mates show a statistically significant effect of training on the probability of employment at three months, and a smaller but still significant effect at six months. The weighted probits yield roughly similar results. A slightly different pattern of training effects is found for women. The simple unweighted estimates without a selectivity correction show that training had no impact on probability of employment; the unweighted, but selectivity corrected estimates, show a positive training effect but only in specifications including dummy variables for different educational attainment. The weighted model estimates (both uncorrected and corrected) show a marginal- ly significant positive effect at three months, and a larger and statistically significant impact on employment at six and twelve months. A substantial proportion of the female trainee sample had no prior work experience.1Z.' From the previous analysis, we know that these women are more likely to remain unemployed for longer than the control group. To account for this possibility, we modify the specification of the employment equations to include an interaction term between training and an indicator variable for prior work experience. These results, reported in Table 9, show that training has a significantly positive effect on employment at three, six and twelve months for women with prior work experience, but a negative and statistically significant training effect at three and twelve months for those without work experience. To summarize, participation in the PROBECAT program appears to impact subsequent employment probabilities of trainees, but in quite different ways for men and women. For males, it increases their probability of being employed up to six months after the program, but does not have an effect thereafter. Taken together with the previous finding that they find jobs more quickly, this result suggests that male trainees tend to be employed for a greater proportion of the post-training period as compared to the control group. For women, training appears to raise employment probabilities for those with prior work experience. Unlike males, however, this positive training effect persists over the year. In contrast, women without any work experience benefit relatively little, if at all, from training. IZ In contrast, the proportion of male trainees with no previous work experience is quite small. Because of this, we decided not to estimate separate training effects by previous work experience for males.  - 54 - V. MONTHLY EARNINGS. H-URM QE WORK. AID HOUR LWAGE We also investigate the impact of training on monthly earnings, weekly hours of work, and hourly wage. We report two sets of results: the first focusing on overall program effects, the second on program effects by level of educational attainment of trainees. To anticipate the results, we find very significant differences in the effects of training on monthly earnings and weekly hours worked across schooling groups. Data and Summary Statistics The dataset used for this analysis was constructed from the retrospec- tive PROBECAT survey and two ENEU cohorts. The first cohort included individu- als who were unemployed in the third quarter of 1990 (they are tracked for 12 months). The second cohort included individuals who became unemployed in the fourth quarter of 1990, and were not in the first cohort; for this latter cohort, only nine months of information are available. We pooled all observa- tions reporting positive (and usable) salaries anytime over the period of the PROBECAT survey, and over the 12 (or 9) months interval in the case of the ENEU cohorts.1*1 The dataset thus contains multiple observations on each individual, for every job spell experienced by trainees, and for every quarter in which ENEU cohorts are observed to be employed. The final dataset contains 1,212 trainee-observations and 1,051 control-observations for men; for the women, the corresponding sample sizes are 681 and 300 observations, respec- tively. I To accommodate the specific structure of this dataset, we created two kinds of control variables. The first is a variable for the number of months between the date salaries are reported and time 0, which is either the completion of training or the initial date of unemployment for the ENEU cohorts. The second is a set of quarterly dummy variables to account for inflation in salaries over the base period (pre-1991). Means of the three outcome variables for men and women are reported in Table 10, separately for trainee and control samples. On average, male trainees report monthly earnings of 682 thousand pesos as compared to 638 thousand pesos for the controls; in other words, earnings that are about 7 percent higher than those of the control group. However, higher earnings may partly reflect inflation since trainee salaries lnclude those reported in the 1I/We define usable data as positive monthly earnings less than 5 million pesos, and hours worked less than 85 hours a week.  - 55 - first quarter of 1992 while control group salaries end in the third quarter of 1991. Trainees also report slightly higher hours of work, 45.8 hours per week, as compared to 43.6 hours for the controls. Finally, the hourly ware of 3,984 pesos for trainees is slightly lower than the 4,016 pesos estimated for the control group. In the female sample, trainees report monthly earnings that are about 7 percent lower than those of the control group: 532 thousand pesos versus 572 thousand pesos, respectively. Like their male trainee counterparts, those that worked did so for three hours a week longer than the controls. However, their hourly wage was almost 700 pesos per hour less than that received by the control group of women. The Regression Results We analyze the impacts of training on the logarithm of monthly earnings, weekly hours worked, and the logarithm of hourly wages. Each of these outcome measures is regressed on a vector of explanatory variables, including a quadratic measure of potential work experience, level of schooling attainment, prior work experience and unemployment duration at time 0, five quarterly dummy variables, and an indicator variable for whether the individual partici- pated in PROBECAT. We also experiment with interaction terms between training and levels of educational attainment to see if training effects vary across different schooling groups (these are reported below). As discussed above, several potential measurement problems arise when trainees are not randomly selected from the unemployed population. To correct for potential selectivity bias, we first estimate a probit model relating program participation to those selection criteria variables for which weave data, namely marital status, number of children, schooling, and time spent unemployed prior to training. Following Heckman (1979), we include the inverse Mills ratio as a regressor in the outcome equations. The second issue-- overrepresentation of trainees in our data--is addressed by including choice- based weights in these models. Overall Program Effects Table 11 summarizes the overall impacts of program participation for men and women."/' The two columns in Table 11 correspond to different model specifications: (1) simple ordinary least squares regression, and (2) models 12/ The full set of results are available upon request.  - 56 - that correct for non-random selection into the PROBECAT program. The rows in this table correspond to results for models estimated without corrections for the oversampling of trainees and models which include choice-based weights. The reported coefficients in Panel A and Panel C may be interpreted as the average percentage change in monthly earnings and hourly wage attributable to participation in the PROBECAT program; coefficients in Panel B are the mean changes in weekly hours worked attributable to participation in training. First, consider the monthly earnings of the male sample. Recall that male trainees reported monthly earnings that, on average, were 7 percent higher than those of the control group. However, the unweighted model specification (1) without selectivity correction indicates that the monthly earnings of male trainees are 12 percent lover than that of the controls, suggesting that the two groups have very different attributes. In model (2), which corrects for selectivity bias (and these group differences), this earnings differential is reversed. The unweighted estimates now show that the monthly earnings of trainees are 17.7 percent higher, a difference that is statistically significant; however, the weighted results only show a training effect that is marginally significant. The results also suggest that training is associated with increased labor supply for the male sample. In the raw data, trainees reported working about two hours more a week as compared to the controls. The hours regression without selectivity correction (model 1) reveals no significant differences in hours worked between the two groups. However, model (2) shows that trainees supply, on average, between 7.8 (unweighted) and 8.4 (weighted) more hours per week'than the controls. In the hourly wage results, selectivity correction reduces or even reverses the negative effect of PROBECAT on hourly wage. The weighted results with selectivity correction (model 2) revealed no differences in hourly wage between the two groups. Together, these results suggest that, on average, training raises monthly earnings of male trainees through greater supply of hours worked per week, not through higher hourly wages. A similar pattern of training effects is found for the women. In the aggregate data, women trainees received lower monthly earnings and hourly wages, but worked more hours per week, than the control group. In model (1), these program effects on earnings, hourly wage, and hours worked are generally statistically significant. In model (2), however, many of these differences disappear. The only statistically significant effect of PROBECAT is in the unweighted results for hours of work; here, the results suggest that women trainees work approximately six extra hours of work per week as compared to the control group.  - 57 - Training Effects by Schooling Group Thus far, we have assumed implicitly that program effects are invariant across different groups of trainees. This may not be a good assumption if the effectiveness of training is shaped by the initial skill endowments which trainees bring to the PROBECAT program. If educaticn helps trainees get more out of training, we would expect training effectiveness to increase (at least over some range) with level of schooling. We address this possibility by including interaction terms between the training variable and the indicator variables for each level of schooling attainment. As before, a separate set of dummy variables for each schooling group (except one) are included to control for pure schooling effects common to both groups of trainees and controls. Table 12 presents the results of estimating these expanded model speci- fications for men. To conserve space, we only report regression parameters for two outcomes measures: the logarithm of monthly earnings and hours worked per week.)1 Two sets of estimates are reported, one for models estimated with the selectivity correction, and one with both selectivity correction and choice-based weights. The corresponding results for women are largely unchanged, suggesting that the training effects in these specific outcomes are similar across schooling groups. The results for women are therefore not reported here. For the male sample, Table 12 suggests that training has positive and statistically significant effects on monthly earnings and hours of work by level of.schooling attainment. In general, these earnings and hours effects exhibit an inverted U-shape pattern: being lowest for the least educated males, rising with years of schooling to a peak at the secondary school level (7 to 9 years of schooling), and then declining for the most educated individ- uals (with post-secondary schooling). When corrected for sample selectivity, the results indicate that training reduces the monthly earnings for the least educated trainees (however, the parameters are not statistically significant). In the weighted models, the earnings effects of training are positive and usually larger, though they are statistically significant only for those with 7 to 9 years of schooling. The hours of work results change in a similar fashion for the two specifications; however, unlike the earnings results, the training effects tend to be positive and significant for most educational groups. 2QW The hourly wage results are unchanged in the expanded specification. In almost all cases, the training-schooling interaction terms are not different from zero.  - 58 - These results--positive impacts on monthly earnings and hours worked but no systematic effect on hourly wage--raise questions about whether training actually increases productivity, in which-case one might expect higher hourly wages, or whether it raises earnings by inducing greater work effort among trainees. We believe the answers lie in the kinds of jobs that trainees find after completing training. The raw data suggest that a higher proportion of trainees eventually find jobs in large enterprises as compared to the control group. For the sample as a whole, employment in large firms is associated with longer hours of work per week and higher monthly salaries, which may partially explain the results that we find. To explore this hypothesis more rigorously, we estimated an ordered logit model for the probability of employment in ten (increasingly larger) size categories of firms. As regressors, we included measures of experience, duration of previous unemploy- ment, time dummy variables, and an indicator variable for participation in the PROBECAT program. Table 13 reports the results for three different model specifications: training by itself, training interacted with a quadratic schooling measure, and training interacted with indicator variables for each schooling level. Compared to the control group, all three specifications suggest that trainees are more likely to find jobs in larger firms. The fully interacted specifica- tion reveals an inverted-U pattern of effects by schooling group, similar to the previous findings for earnings and hour of work. In short, the PROBECAT program appears to raise trainees' monthly earnings and work hours by facili- tating their entry into larger firms offering higher pay and more stable, full-time employment. It may achieve this result either by retraining the unemployed in skills for which there is demand, i.e. a matching effect, or by making them more trainable, i.e. providing them with learning skills. PROBECAT may also indirectly impact their future earnings potential by placing them in large firms that tend to provide employees with more on-the-job training.Ul Trainees will have to be followed over a longer time period for us to verify this hypothesis. To summarize, the results suggest that participation in PROBECAT in- creases monthly earnings of male trainees, and that this occurs primarily through their increased hours of work. The disaggregated analyses by school- ing reveals that this effect varies with schooling attainment. The effects of training on monthly earnings are largest for those with secondary education (7 to 9 years of schooling). The hours of work effects are large and positive XL/ Estimates drawn from the 1988 National Employment Survey show that the proportion of workers receiving training in the workplace varies from 5% in micro enterprises to 23% in large firms (those with more than 250 employees).  - 59 - for most groups, except possibly for those with the lowest and highest levels of education. For females, there is some evidence that work hours are increased by training, but these do not translate into higher monthly earn- ings. Unlike their male counterparts, the earnings and hours effects of training do not vary by level of schooling. The results also suggest that, for males, program participation increases the probability of finding employ- ment in a large firm. Since large firms tend to pay higher wages, provide more training opportunities and thus have steeper earnings profiles, finding a job in a large firm is likely to imply increased earnings opportunities over time for trainees relative to controls. VI. CONCLUSIONS AND IMPLICATQIONS Our evaluation of Mexico's PROBECAT program sought to measure the impact of training on a larger set of labor market outcomes than is traditionally investigated in manpower training evaluation studies. In these analyses, training outcomes were estimated by comparing PROBECAT trainees to a control group of unemployed individuals, and an effort was made to account both for non-random selection of individuals into the program and for the choice-based design of our datasets. Summary of Findings We arrived at the following general conclusions. First, trainees move out of unemployment more quickly than do members of the control group. However, training does not appear to reduce the duration of unemployment for trainees without prior work experience. Second, training improves the likelihood of employment for program participants over a longer period of time. Compared to the control group, male trainees are more likely to be employed three and six months after training; female trainees with prior work experience also benefit, but unlike male trainees, these positive employment effects appear to persist over a full year. Third, program participation for males, increases the likelihood of employment in large firms, which typically provide more training opportunities and higher wages. Fourth, program participation raises the post-training earnings of men but not women. For male trainees, these earnings effects vary systematically by level of school- ing attainment, being greatest for those with 7 to 9 years of schooling. Finally, for both men and women, training induces an increase in the number of hours worked per week. For males, this hours of work effect translates into higher monthly salaries; for females, it does not.  - 60 - Cost-Effectkveness of PROBECAT What do these findings imply about the cost-effectiveness of the PROBE- CAT program? To answer this question we focus on two of the more significant outcomes identified in the previous analyses: first, the impact of program participation on the speed with which trainees find jobs; second, the impact of program participation on monthly earnings. These two impacts, and their implications for the benefit streams associated with program participation, are combined with cost estimates to arrive at some tentative conclusions about the cost-effectiveness of the PROBECAT program. The costs and benefits of the program are discussed below. We include both the direct training costs as well as the indirect costs associated with participation in the program. Direct costs (costs for instructors, training materials, and program administration) are readily available from STPS: in 1991, the average operating cost per course completed was about 350.4 thousand pesos. To derive estimates of indirect costs we use the following approach. We assume that at time to each unemployed worker faces two possible strate- gies: (i) to immediately initiate job search (control group); or (ii) to enter a training course and thus delay job search by the length of the couxse (trainees). We know, from our previous analysis, that the expected duration of search for trainees conditional on having attended the course (ie. once the course is over) is shorter than the expected duration of search for cor.trols (by about 2.5 months). However, we also have to take into account the deferral of job search by trainees to participate in the program. We thus calculate the time to job for trainees by adding to search time the cost of delaying search by attending the training course (on average equal to 2.9 months). The cost of the training period is thus valued in terms of search time foregone. The benefit measures are calculated from the previous esti- mates of training effects on monthly earnings. Monthly earnings are predicted for trainees and controls using sample means of all regressors. Table 14 summarizes the calculation of these cost and benefit measures for different groups of male trainees and controls. The first two columns show the mean duration of search for trainees (4 months) and controls (6.5 months), separately for those with and without prior work experience, and for younger (age 25 or less) and older (over 25 years) individuals. The differ- ence between (2) and (1) measures the gain in search time (employment effect) attributable to the program. Column (3) adds the average duration of training (2.9 months) to the search time for trainees. Column (4) reports the differ- ence between columns (3) and (2).  - 61 - For male trainees as a whole, column (4) shows that PROBECAT participa- tion increases total time-to-first job (search + training time) by 0.4 months relative to the control group (6.9 - 6.5 months). For male trainees aged 25 years and over, program participation actually reduces their time-to-first-job by 0.8 months, even after including the added time spent in training; for those with prior work experience, the delay in search from training is completely offset by a shorter search after training. Column (6) shows the predicted monthly wages for trainees and controls evaluated at sample means. The difference between predicted wages for trainees and controls can be interpreted as the earnings effect from training. These earnings effects are large for all groups, averaging about 152 thousand pesos. For female trainees overall, column (4) shows that training increases total time-to-first-job by about 1 month relative to the controls. However, this figure hides substantial differences by demographic group. For females with prior work experience, program participation reduces their time-to-first job by 1.1 months (even when delayed search due to training is included); for those aged 25 and over, training reduces total time to job by about 0.8 months. Column (6) shows predicted monthly sages at sample means for the female trainee and control groups. Although predicted trainee wages are slightly higher than control wages for all demographic groups, these differ- ences are not statistically significant. The net benefits of training are shown in Table 15. Column (1) shows the direct average per trainee cost of training--350.4 thousand pesos.Z1a The second column is the indirect cost of training, namely, the monetized value of'incremental search costs (foregone earnings) associated with train- ing, valued at the average wage of the comparable control group (i.e. the wage trainees would have received had they not participated in PROBECAT). These indirect costs average about 196 thousand pesos for males and 435 thousand pesos for females, but vary by demographic group. They range from 2,088 thousand pesos for females without prior work experience to minus 514 thousand pesos for those with prior work experience, and to minus 575 thousand pesos for male trainees over 25 years. The final two columns summarize the benefits of training associated with increased wages over three months and over twelve months, respectively. The main conclusion that emerges from Table 15 is that for some groups of male trainees (those with prior work experience and those over 25), the JZ/ The training stipend is not taken into account as it is simply an income transfer and not an economic cost.  - 62 - benefits of program participation outweigh the costs within 3 months of starting employment. For all other males except those with no prior work experience, the benefits outweigh the costs within one_yj&x. Males with no prior work experience, on the other hand, spend the longest time in job search after training (8 months as compared to the trainee mean of 4.4 months) and benefit relatively less from training in terms of monthly earnings (128 thousand pesos as compared to the average benefit of 152 thousand pesos). For this group, the costs of training are offset only after 17 months of higher earnings upon finding employment. For women, we find that program benefits from earlier employment offset the costs for those with prior work experience and for those over 25 years. Although we do not find significant wage effects, for these women the program pays for itself. For other women, the costs exceed the benefits. In short, the PROBECAT retraining program appears to be cost-effective for improving the economic conditions of most groups of unemployed males, except for those with no prior work experience. It also appears to be cost- effective in reducing search time for certain groups of unemployed females, namely older, more experienced female workers. Policy Imolications This evaluation suggests that the unemployed constitute a heterogenous group and that eligibility criteria for program participation are important determinants of the cost-effectiveness of the program. In the specific case of Mexico, the analysis suggests that the selection criteria should be modified to target those demographic groups likely to benefit most from the program, namely unemployed workers with prior work experience, slightly older workers (aged over 25), and those with 6 to 12 years of schooling. For certain groups--the very young, new entrants into the labor force, and those with low levels of schooling attainment--it may be more important to provide other kinds of training, introduce apprenticeship programs to give new entrants some work experience, or facilitate return to school.2W More broadly, our study demonstrates that the results can be very sensitive to the way in which training effects are measured. We identified two principal sources of bias that many manpower training evaluations are likely to encounter: biases arising from (a) sample selectivity and (b) from ZV Some of these conclusions have already been incorporated into the design of the new PROBECAT program under the Mexico Labor Market and Productivity Enhancement Project (1992).  - 63 - non-representativeness of the treatment group. Addressing these biases is essential in any program impact evaluation. Our results strongly suggest that a wide variety of potential program impacts be investigated. Training programs may have an impact on some labor market outcomes but not others. Focusing on one outcome versus others may make the difference between continuation or termination of the program. A broad approach is also potentially more revealing about the direct and indirect ways in which training programs affect target populations. Although the Mexican retraining program has proven to be effective, several issues need to be considered before such programs are replicated on a large scale in other countries: (1) As the impact of the program depends on the characteristics of the unemployed, it appears essential to analyze the structure and character- istics of unemployment prior to implementing any training program. (2) Results and cost-effectiveness of the program also appear to be sensitive to other factors such as the length of the program, and the. overall state of the labor market. In the case of Mexico, the program may have been helped by the fact that unemployment remained moderate and employment fairly stable during the program implementation period. (3) For the above reasons, implementation of these types of training programs should be gradual, and accompanied by a strong monitoring and evaluation system. Finally, it is worth noting that this evaluation still has several important limitations. One, our control sample is quite small. Two, our unemployment duration data for controls had to be imputed by reconstructing complete spells from observations on the same individuals in successive quarters. Three, some important dimensions of PROBECAT--training duration, type of training, mix of theory and practice, and different training provid- ers--were not studied. Future evaluations should attempt to address these shortcomings. In particular, they should investigate the differential impacts of alternative training modalities, and evaluate their relative cost-effec- tiveness. It could also be of interest to track PROBECAT trainees over longer periods of time to measure the long-term effects of the program.  - 64 - Tablo I _ _ _DIUlUTION4 OF UNEMPLOYED BY AGE 1988 I Men Women Age Standard Definition Ak emative Definition Standard Definition 12-1S 4.2 10.7 2.5 16.20 33.3 33.5 36.6 21-25 24.7 19.3 38.1 26.30 133 10.5 38.1 31-40 8.8 9.0 11.7 41-50 8.0 9.5 6.9 51-60 5.1 5.9 2.5 61-70 2.6 1.6 1.7 DISTRIBUTION OF UNEMPLOYED BY EDUCATION LEVEL, 198 ___________Men Wou_ Yeaw of shool Standard Definition Aiunative Definition Standard Definition 0 2.4 4.4 1.6 1-5 yeats 9.7 5 8.6 6 16.0 20.0 14.6 7-8 < 12.9 12.8 8.6 9 20.4 18.8 18.9 10-12 20.2 1S.1 35.6 13 and mom 18.4 13A 12.1  - 65 - Table 2 Demographic Characterlstics of Trtainees and the Unemployed _ " , , - IN( .es - - Females Trainees IU_ Trainees ENEU Age 27.9 25.8 29.0 24.3 % Married 41.2 27.2 45.7 27.2 % Unmarried Couple 3.8 2.6 3.3 4.1 Education: Average Yrs School 9.1 8.8 . 7.8 9.8 Highest level reached: No formal 0.1 1.7 0.4 1.5 Primary incomp. 3.4 12.7 9.1 7.7 Primary 13.2 21.5 18.1 16.9 Secondary incomp. 17.5 9.6 24.5 11.8 Secondary complete 30.5 24.1 29.7 16.4 Higher secondary 26.6 13.6 13.8 28.7 University 8.6 13.2 4.3 15.9 % Head of household 42.8 29.4 11.6 5.1 Note: Controls are unemployed individuals in ENEU 3/90.  - 66 - Table 3 Cox Proportional Hazards Model: Male Sample Independent (1) (2) (3) (4) Variables Age -.009 -0.007 -.008 -.007 ______________ (-1.595) (-1.297) (-1.551) (-1.261) Sch -.016 -.016 (.1.370) (-1.401) Ned .110 .106 (0.284) (0.272) Priminc -.168 -.169 _-0.903) (-0.908) Secine -.015 -.018 (-0.116) (-0.142) Secc -.139 -.137 (-1.200) (-1.184) Sech -.031 -.037 (-0.262) (-0.309) Coil -.296 -.299 __ -1.940) (-1.961) Hhead .318 .311 .315 .309 (3.233) (3.154) (3.203) (3.135) Nohijos -.011 -.008 -.012 -.010 _____________ -(-0.349) (-0.269) (-0.394) (-0.307) Wkexp'0 .737 .742 .777 .775 (5.593) (5.612) (5.565) (5.538) Trainee .355 .340 ._______ _ (4.101) (3.840) Traineel .395 .373 ______________ _______________ ______________ (4.034) (3.739) Trainee2 .321 .312 ______________ _ - , ,____ _ _ ___ (3.380) (3.215) ndependent Variables - ago sch-rr of school ne&l if no formal education (-O otherwise) primiinc-i if incomplete primary :ecincl if incompiste secondary ecc-l if completo secondary sech- if histhr secondary co*l1 *f coi lef hhead-i if household head (.O otherwiso) nohijos-number of chtldren wkexpO0l if prior work experience trainee-i it progrom participant train.e-I it proaran participant 6 unmsplayed -6 mnths trainee2-1 if program participant 6 unmeployod > 6 month  - 67 - Table 4 Cox Proportional Hazards Model: Female Sample Independent (1) (2) (3) (4) Variables Age -.014 -.014 -.011 -.011 __________ (-1.866) (-1.867) (-1.467) (-1.481) Sch .005 .004 (0.300) (0.240) Ned .949 .876 (1.305) (1.208) Priminc .042 .024 ______________ ______________ (0.212) (0.119) Secinc -.017 -.041 _____________ Z(-0.115) (-0.276) Secc -.074 -.109 (-0.490) (-0.727) Sech .125 .123 ______________ (0.787) (0.769) Coll .043 -.0002 _____________ (0.187) (-0.001) Hhead .399 .390 .457 .449 ______________ (2.970) (2.881) (3.427) (3.343) Nohijos -.002 -.007 .006 -.0002 ______________ (-0.056) (-0.203) (0.160) (-0.007) iWkexpO .507 .506 (4.731) (4.713) Trainee .012 .071 ___ _ (0.098) (0.543) Traineel .236 .314 (1.631) (2.078) Trainee2 -.153 -.083 (-1.175) (-0.608) odpen oat. var ubem - age - asb.ys of school ned-i it no formal education (-0 otherwise) primincl tf incomplete primary socine-I it incaplets secondary coce-i if coplete *econdary sechmi if hicoer secondary coll-i if co ege - hhoad-I if household head (-0 otherwise) - nohijos'number of children - ukexpOl if prior wozh. expertence - train ee- if program participant - trsinoeeli if progrm participant b uneployed 6- months - troineo21 tf program partiipzant 6 unemployed 4 I months  Td I S Emploqment Outomes for Trakne vens Compaison Group (lEUI Aktsmav Defitin of Unsployod .~~~~~ ... te.. . . m. .... ....___.- Tr aiee Cte i a