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Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel

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  • Bassanini, Andrea
  • Brunello, Giorgio

Abstract

According to Becker [Becker, G., 1964, Human Capital, NBER, New York], when labour markets are perfectly competitive, general training is paid by the worker, who reaps all the benefits from the investment. Therefore, ceteris paribus, the greater the training wage premium, the greater the investment in general training. Using data from the European Community Household Panel, we compute a proxy of the training wage premium in clusters of homogeneous workers and find that smaller premia induce greater incidence of off-site training, which is likely to impart general skills. Our findings suggest that the Becker model provides insufficient guidance to understand empirical training patterns. Conversely, they are not inconsistent with theories of training in imperfectly competitive labour markets, in which firms may be willing to finance general training if the wage structure is compressed, that is, if the increase in productivity after training is greater than the increase in pay.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 15 (2008)
Issue (Month): 2 (April)
Pages: 272-290

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Handle: RePEc:eee:labeco:v:15:y:2008:i:2:p:272-290

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Web page: http://www.elsevier.com/locate/labeco

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Cited by:
  1. Matteo PICCHIO & Jan C. van OURS, 2011. "Retaining through Training: Even for Older Workers," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. Haelermans, Carla & Borghans, Lex, 2011. "Wage Effects of On-the-Job Training: A Meta-Analysis," IZA Discussion Papers 6077, Institute for the Study of Labor (IZA).
  3. Picchio, Matteo & van Ours, Jan C., 2010. "Market Imperfections and Firm-Sponsored Training," IZA Discussion Papers 4988, Institute for the Study of Labor (IZA).

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