Training Vouchers, Cash Transfers, and their Effects on Employment-Related Outcomes

This literature review examined studies related to cash transfers and training voucher programs. The researchers conducted a search of the literature using several bibliographic databases/search engines and searched for terms expressing the concepts of interest: cash transfers and training vouchers, as well as specific training voucher programs identified in the search. They also explored the resources database of the National Bureau of Economic Research for additional relevant works.

They added these studies to the ones identified in the broader literature search and selected the most relevant studies for this review. After preliminary test searches retrieved few relevant articles, they took a broad approach that retrieved more than 1,000 studies, reports, and articles. These included numerous non-relevant articles, requiring extensive scanning of titles and abstracts to determine relevance.

Relevant literature was then reviewed in full based on the following criteria:

• For the cash transfer component of the search, the focus was on direct cash transfer programs, not on tax credits or other conditional transfers.
• The selected studies examined outcomes limited to employment, earnings, or education, excluding health-outcomes-only studies.
• For the training voucher component, the focus was on programs that provided money vouchers instead of direct training.
• In both searches, the interventions were implemented in industrialized countries.

Training Vouchers: Workforce training vouchers give recipients the ability to improve their employment and future wages using a sum of money that typically has a capped value and is only accepted by certain training providers for occupational training but also other social services such as housing and education.

Cash Transfers: Direct transfers may be divided between conditional versus unconditional cash transfers and transfers in amounts that supplement other income or benefits versus those that intend to provide a basic income.

Please note: Not included in this discussion is literature examining the impacts of social service programs, such as Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program, or the Earned Income Tax Credit. A vast body of research on these and other means-tested social service programs is out of scope for this review.

(The literature review is 29 pages long.)

These findings may be of interest to workforce development programs and practitioners:

1. Results of training voucher programs are generally positive but not necessarily overwhelmingly so. They appear to provide incremental gains in employment rates and salaries. However, the evaluation of Individual Training Account models did not find evidence to support the model with the most customer choice.
2. In the short term, vouchers may reduce participation in the workforce due to time spent in classes and training. However, this reduction appears temporary.
3. Programs in which recipients receive more counseling seem to be more successful than programs where recipients are self-directed.
4. Benefits extend beyond the individual training voucher recipient. For example, military members whose spouses participate in the MyCAA program experience higher retention rates, providing an advantage to the military, which saves on recruiting and training costs for replacing enlisted personnel. Benefits may also include increased community stability and better educational, social, and health benefits for recipients’ children. There are also potential societal benefits in reduced dependence on welfare programs and a more highly skilled workforce available to employers.

The researchers identified the following recommendation for future consideration:

• Further research could focus on longer-term benefits of training voucher programs; the return on investment of voucher programs for individuals,
  employers, communities, and taxpayers; and the optimum mix of counseling and self-directedness available in voucher programs.

The researchers identified the following findings for the Cash Transfer Programs:

• Programs are generally localized and affect relatively small numbers of people. Most are fairly short-lived.

The researchers identified the following recommendations for future consideration:

1. Additional research examining program outcomes across larger numbers of participants and for longer time periods would be of great interest and could begin to answer how these programs might work on a large scale.
2. Determining return on investment over the short-, medium-, and long-term types of direct transfers would be invaluable. It might help alleviate employers’ concerns about transfers’ effects on workforce participation.
3. Incorporating research on other basic income programs would also be valuable, including experimental programs currently in progress.

• Last Updated:
• Created:
• Resource Publication Date: 2021
• Author(s): Manhattan Strategy Group
• Funding Source: U.S. Department of Labor, Employment and Training Administration
• Resource Availability: Publicly available
• Posted by: Alina Burton
• Posted in: Workforce System Strategies