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Do Train-or-Pay Schemes Really Increase Training Levels?

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  • Benoit Dostie

Abstract

type="main" xml:id="irel12092-abs-0001"> Reacting to perceived market failures leading to under-optimal levels of firm-sponsored training, governments all over the world have stepped in with various policy instruments to alleviate this problem, using incentives such as regulation or co-financed schemes directed at firms or at individuals. Despite the widespread use of these schemes, rigorous empirical evaluation of such policies is uncommon. In this paper, we provide a careful evaluation of a reform in a train-or-pay scheme used in Canada that exempted medium-sized workplace from the training requirement. Our identification strategy involves comparing changes in training levels in medium-sized workplaces, before and after the reform, to changes for both smaller and larger workplaces. We also compare relative changes in training intensities to those observed in a neighboring province in which no such changes took place. We find the policy had no impact on training levels but caused firms to change their human capital investments portfolio, substituting informal and formal training.

Suggested Citation

  • Benoit Dostie, 2015. "Do Train-or-Pay Schemes Really Increase Training Levels?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(2), pages 240-255, April.
    • Handle: RePEc:bla:indres:v:54:y:2015:i:2:p:240-255
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    File URL: http://hdl.handle.net/10.1111/irel.2015.54.issue-2
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    References listed on IDEAS

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    Cited by:

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    3. Konstantinos Angelopoulos & Andrea Benecchi & Jim Malley, 2017. "Can Subsidising Job-Related Training Reduce Inequality?," CESifo Working Paper Series 6605, CESifo.
    4. Sofie Cabus & Eszter Nagy, 2021. "On the productivity effects of training apprentices in Hungary: evidence from a unique matched employer–employee dataset," Empirical Economics, Springer, vol. 60(4), pages 1685-1718, April.

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