Direct and indirect effects of training vouchers for the unemployed

This paper evaluates the effects of awarding vouchers for vocational training on the employment outcomes of unemployed voucher recipients in Germany, as well as the potential mechanism through which they operate. This study assesses the direct effects of voucher assignment net of ac¬tual redemption, which may be driven by preference shaping and learning about possible human capital investments or simply by the costs of information gathering. Using a formal mediation analy-sis framework based on sequential conditional independence assumptions and semiparametric match¬ing estimators, our results suggest that the negative short-term and positive long-term em-ployment ef¬fects of receiving a voucher are mainly driven by actual training participation. However, the direct ef¬fect of just obtaining a voucher is negative over the short-run as well. This result points to potential losses in the effectiveness of such training provision systems if individuals decide not to redeem vouchers, as employment chances are lower than under non-award over the short-run and under redemption over the long-run, which makes non-re¬demption the least attractive option.