Value-for-Money Analysis of Active Labour Market Programs

Abstract

Accountability requirements by central agencies in government have imposed expectations on management to show results for resources used — in other words, “value for money.” While demonstrating value for money means showing that the program has relevance and a rationale and that the program logic and theory make sense, the core of value for money lies in showing that a program is cost-effective. Unfortunately, many public programs and policies do not provide quantifiable outcomes, and this limits conclusions on value for money. However, labour market training programs are amenable to cost-effectiveness analysis (CEA), provided that the evaluation methodology meets certain conditions. This article reviews CEA in the context of labour market training, especially programs directed to economically disadvantaged groups. After reviewing the data availability and the analytical methods commonly used to support value-for-money analysis of training programs, the authors present several practice improvements that would increase the “value” and validity of value-for-money analysis.