A Government Policy To Induce Efficient Retraining During Unemployment.

The government's role in retraining unemployed workers during nonrecession periods should be to subsidize retraining as they subsidize job search by way of the unemployment compensation system. The retraining subsidy should be about the same order of magnitude as the job search subsidy and should be administered by the public employment service which administers the subsidy to job search. The subsidy should support both institutional and on-the-job retraining, and it should be provided to both women and men. The percentage increase in retraining by women workers would likely exceed that of men workers if the policy proposed were adopted. An additional return from improving the allocation between search and retraining is the reduction of the unemployment rate as conventionally measured in the United States. (BL)