Many Dropouts? Never Mind! - Employment Prospects of Dropouts from Training Programs

The employment effects of training programs for the unemployed are frequently studied, but little is known about the number, the characteristics, and the labor market prospects of those who drop out of these programs. The aim of this paper is to contribute to filling this gap. Using German administrative data it turns out that one out of five participants of further training programs drops out of the program. Descriptive analysis suggests that the head start dropouts have with regard to employment vanishes over time. To estimate the mediumand long-term effects of dropout a bivariate dynamic random effects probit model taking into account state dependence and selection on unobservables is used. The model is estimated with Markov Chain Monte Carlo (MCMC) methods. Results suggest that dropping out of the program has on average no or very small effects on the long-run employment prospects of dropouts.