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A New Approach to estimate the Wage Returns to Work-related Training

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  • Edwin Leuven

    ()
    (University of Amsterdam)

  • Hessel Oosterbeek

    ()
    (University of Amsterdam)

Abstract

This paper proposes a new approach to identify the wage e ects of training.The idea is to narrow down the comparison group by only taking into consideration theworkers who wanted to participate in training but did not do so because of some randomevent. The point estimate of the return to training consistently drops when restrictingthe comparison group this way. While the OLS estimate of the return to training participationis significantly positive, this is no longer the case when we use the new comparisongroup. This outcome suggests that a large share of what is usually interpreted as returnsto training is actually the return to some unobservable characteristic. See also the article in Journal of Applied Econometrics, 2008, 23(4), 423-34.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-091/3.

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Date of creation: 23 Sep 2002
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Handle: RePEc:dgr:uvatin:20020091

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  1. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  2. Greenhalgh, Christine & Stewart, Mark, 1982. "The effects and Determinants of Training," The Warwick Economics Research Paper Series (TWERPS) 213, University of Warwick, Department of Economics.
  3. 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.
  4. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt.
  5. Daron Acemoglu & Jorn-Steffen Pischke, 1998. "The Structure of Wages and Investment in General Training," NBER Working Papers 6357, National Bureau of Economic Research, Inc.
  6. J.D. Angrist & Guido W. Imbens & D.B. Rubin, 1993. "Identification of Causal Effects Using Instrumental Variables," NBER Technical Working Papers 0136, National Bureau of Economic Research, Inc.
  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. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  9. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  10. Edwin Leuven & Hessel Oosterbeek, 2002. "Evaluating the effect of tax deductions on training," Labor and Demography 0205001, EconWPA.
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Citations

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Cited by:
  1. Anja Kuckulenz & Michael Maier, 2006. "Heterogeneous Returns to Training, An Analysis with German Data Using Local Instrumental Variables," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(1), pages 24-40, January.
  2. Hendrik Jürges & Kerstin Schneider, 2005. "Dynamische Lohneffekte beruflicher Weiterbildung," MEA discussion paper series 05092, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  3. Pfeifer, Christian & Janssen, Simon & Yang, Philip & Backes-Gellner, Uschi, 2011. "Effects of Training on Employee Suggestions and Promotions in an Internal Labor Market," IZA Discussion Papers 5671, Institute for the Study of Labor (IZA).
  4. Asplund, Rita, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy.
  5. Michael Beckmann & Grit Muehler & Bernd Schauenberg, 2007. "The Returns to Continuous Training in Germany: New Evidence from Propensity Score Matching Estimators," Working papers 2007/04, Faculty of Business and Economics - University of Basel.
  6. Benoît Mahy & Mélanie Volral, 2010. "Firm Training and Labour Demand in Belgium: Do Productivity Dominate Cost Effects?," DULBEA Working Papers 10-08, ULB -- Universite Libre de Bruxelles.
  7. Uschi Backes-Gellner & Johannes Mure & Simone Tuor, 2006. "The Puzzle of Non-Participation in Continuing Training – An Empirical Study of Permanent vs. Occasional Non-Participation," Economics of Education Working Paper Series 0004, University of Zurich, Institute for Strategy and Business Economics (ISU).
  8. Lutz Bellmann & Peter Ellguth, 2006. "Verbreitung von Betriebsräten und ihr Einfluss auf die betriebliche Weiterbildung," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(5), pages 487-504, September.
  9. Rita Asplund, 2005. "The Provision and Effects of Company Training: A Brief Review of the Literature," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 47-73.

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