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Evaluating the Effect of Tax Deductions on Training

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  • Edwin Leuven

    (University of Amsterdam and Tinbergen Institute)

  • Hessel Oosterbeek

    (University of Amsterdam and Tinbergen Institute)

Abstract

Dutch employers can claim an extra tax deduction when they train employees older than age 40. This discontinuity in a firm's training cost is exploited to identify the tax deduction's effects on training participation and of training participation on wages. The results show that the training rate of workers just above age 40 is 15%20% higher than that of workers just below age 40. This difference mainly results from the postponement of training and is not a stimulating effect of the measure. The two-stage least squares estimate of the wage effect of training is not statistically different from zero.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 22 (2004)
Issue (Month): 2 (April)
Pages: 461-488

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Handle: RePEc:ucp:jlabec:v:22:y:2004:i:2:p:461-488

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  1. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1987. "Employer Size: The Implications for Search, Training, Capital Investment, Starting Wages, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 76-89, January.
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  7. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
  8. John Bishop, 1994. "The Impact of Previous Training on Productivity and Wages," NBER Chapters, in: Training and the Private Sector, pages 161-200 National Bureau of Economic Research, Inc.
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  10. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December.
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  12. Booth, Alison L, 1993. "Private Sector Training and Graduate Earnings," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 164-70, February.
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