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1. Consider a government training program that provides low-skilled men job-specific training. To evaluate this program, members of the target population were randomly assigned to either a treatment group that was eligible to receive services under the program or to a control group that was not. Using this evaluation design, the following information was obtained:
a. Using a 5 percent discount rate, a zero-decay rate, and a five-year time horizon, compute the present value of the net gain (or loss) from the program from the trainee, nonparticipant, and social perspectives. In doing this, ignore program impacts on leisure and assume that all benefits and costs accrue at the end of the year in which they occur.
b. Once again ignoring program impacts on leisure, recompute the present value of the net gain (or loss) from the program from the trainee, nonparticipant, and social perspectives, assuming that at the end of the two-year follow-up period program impacts on earnings and transfer payments begin to decay at the rate of 20 percent each year.
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