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Improving skills for more and better jobs?

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Author Info

  • Andrea Bassanini

    ()
    (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Panthéon-Assas - Paris II)

Abstract

I use data from the ECHP to assess the effects of adult training on individual labour market performance. Although I find that employee training has a clear impact on wage growth only in the case of young or highly educated employees, it appears to have a stronger impact on employment security in the case of both older and low-educated workers. The contradiction is only apparent since, as standard in the literature, training wage premia are estimated on a censored sample including only employed workers. Due to the existence of downward wage rigidity, one can expect that those workers who are unable to maintain their productivity (due, for instance, to skill obsolescence) are more frequently laid–off and thereby excluded from our sample. Once foregone income due to unemployment spells is taken into account, it can be concluded that training positively affects earnings at any age and level of educational attainment. In spite of these high ex post private return, pervasive market failures justify a pro-active approach to training policy. I argue that co-financing arrangements — under which governments, employers and/or employees jointly finance training — can better leverage the required resources to upgrade the competences of those in employment. Co-financing schemes, if carefully designed, seem to be potentially effective in reducing under-provision of training — both overall and for specific groups — in a way that minimises deadweight losses, although specific programmes for the unemployed or the inactive might require full government funding.

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File URL: http://halshs.archives-ouvertes.fr/docs/00/16/96/12/PDF/European_Economy04.pdf
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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00169612.

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Date of creation: 2004
Date of revision:
Publication status: Published, European Economy: Special Reports, 2004, 3, 103-137
Handle: RePEc:hal:journl:halshs-00169612

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00169612/en/
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Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: Training; wages; job security; training policy; ECHP;

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Citations

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Cited by:
  1. H. Dawid & S. Gemkow & P. Harting & K. Kabus & K. Wersching & M. Neugart, 2008. "Skills, Innovation, and Growth: An Agent-Based Policy Analysis," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(2+3), pages 251-275, June.
  2. Picchio, Matteo & van Ours, Jan C., 2013. "Retaining through training even for older workers," Economics of Education Review, Elsevier, vol. 32(C), pages 29-48.
  3. Bert Minne & Marc van der Steeg & Dinand Webbink, 2008. "Skill gaps in the EU: role for education and training policies," CPB Document 162, CPB Netherlands Bureau for Economic Policy Analysis.
  4. Biagetti, Marco & Scicchitano, Sergio, 2009. "Inequality in workers’ lifelong learning across european countries: Evidence from EU-SILC data-set," MPRA Paper 17356, University Library of Munich, Germany.
  5. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
  6. Lilas Demmou, 2012. "Matching Skills and Jobs in Estonia," OECD Economics Department Working Papers 1007, OECD Publishing.
  7. Badescu, Mircea & Loi, Massimo, 2010. "Participation in training of adult workers in European countries. Evidences from recent surveys," MPRA Paper 32202, University Library of Munich, Germany.

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