Individual Training Accounts: Empowering Customers

Publications

The Workforce Investment Act of 1998 (WIA) brought about substantial changes in the provision of employment and training services. One of its key objectives is to empower customers to make their own decisions about training, while providing appropriate information and support.  Under WIA, instead of program staff deciding what type of training customers should get, customers receive individual training accounts (ITAs)—vouchers that they can use to pay for any training program, as long as it is on a list of eligible training providers.

The U.S. Department of Labor (DOL) sponsored an experimental study to provide policymakers with information on the effectiveness of different approaches to managing ITAs. The experiment randomly assigned customers eligible for ITA training to three approaches that Mathematica designed, based on a study of sites that had previously operated training voucher programs. The approaches differed along three dimensions—the amount of counseling and whether it was mandatory, whether counselors could reject customers’ choices of training programs, and whether the amount of the ITA was fixed or determined by the counselor on the basis of customer needs.

Specifically, the three approaches were:

1.  Structured Customer Choice Model. Counselors played a central role in directing scarce WIA training funds to customers and selecting programs likely to yield a high return. Counselors could reject customers’ training choices; and the amount of the ITA was customized to the needs of each customer.

2. Guided Customer Choice Model. Customers were required to participate in some counseling but made the final decisions about training choices. Customer choices were constrained by fixed-value ITAs.

3. Maximum Customer Choice Model. Customers were not required to participate in any counseling and made the final decisions about training. These choices were constrained by fixed-value ITAs.

From July 1999 to September 2005, Mathematica and its subcontractors, Social Policy Research Associates and Decision Information Resources, Inc., evaluated the ITA experiment to estimate the net impacts and cost-effectiveness of the three approaches. Between January 2002 and March 2004, a total of 7,922 customers were randomly assigned and included in the study sample. Three rounds of in-person visits were conducted in eight sites. During these visits, staff interviewed administrators and counselors.  Data were collected on the time involved in administering ITAs, as well as on the cost of counselors’ time.

A study tracking system collected the information necessary for random assignment and tracked the amount of counseling received, the size of the ITA issued, and the choice of training program and provider. Quarterly wage and unemployment benefit records for all randomly assigned customers were collected from each state involved in the experiment. Data were collected for five quarters before and after random assignment.

Mathematica oversaw an implementation analysis based on the site visit data that examined how each site implemented each approach, including fidelity to the approach model.  It also examined differences across sites in the context in which the approaches were implemented, the challenges of implementing the approach, and the opinions of the counselors on each of the three approaches.

The impact analysis estimated both short-term outcomes, such as receipt of counseling and receipt of an ITA, as well as longer-term outcomes, such as receipt of training, how the training was funded, employment and earnings, and receipt of unemployment insurance benefits and public assistance benefits. 

Finally, we analyzed the relative benefits and costs of each approach. The benefits included any increase in earnings or reduction in unemployment insurance receipt. The costs included the value of ITAs, other training costs, and time spent by employment counselors.

Extended Evaluation

A concern about the original study was that the follow-up period was too short to observe longer-term impacts. Participants were interviewed just 15 months after random assignment and many customers were still in training at that time. As a result, the evaluation was extended to include the following components:

• Second follow-up survey of ITA study participants
  
• Additional data collection on employment and wages covered by Unemployment Insurance (UI)
  
• Updates of experimental estimates of the net impacts of ITA approaches
  
• Feasibility of estimating the net impacts of ITA training versus no training, using a nonexperimental comparison group design
  
• Public use data file for external validation and replication of study findings

Findings from the extended evaluation will be available in late 2010.

Publications

“Managing Customers’ Training Choices: Findings from the Individual Training Account Experiment" (December 2006) Appendices
"Using Vouchers in Government Training Programs: Findings from the Individual Training Account Experiment" (October 2005)
"Using Vouchers in Government Training Programs: Findings from the Individual Training Account (ITA) Experiment" (June 2005)
"An Evaluation of the Individual Training Account/Eligible Training Provider Demonstration" (May 2005) Executive Summary
"The Effects of Customer Choice: First Findings from the Individual Training Account Experiment" (December 2004)

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