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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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  • Andrea Bassanini

    ()
    (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Panthéon-Assas - Paris II, CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII)

  • Giorgio Brunello

    (dipartimento di scienze economiche - Universita di Padova)

Abstract

According to Becker [1964], 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

Paper provided by HAL in its series Post-Print with number halshs-00214192.

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Date of creation: 2008
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Publication status: Published, Labour Economics, 2008, 1-19
Handle: RePEc:hal:journl:halshs-00214192

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00214192/en/
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Related research

Keywords: General training; Off-site training; Training wage premia; Wage compression; ECHP;

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  1. Edward P. Lazear, 2003. "Firm-Specific Human Capital: A Skill-Weights Approach," NBER Working Papers 9679, National Bureau of Economic Research, Inc.
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Cited by:
  1. Carla Haelermans & Lex Borghans, 2012. "Wage Effects of On-the-Job Training: A Meta-Analysis," British Journal of Industrial Relations, London School of Economics, vol. 50(3), pages 502-528, 09.
  2. Picchio, M. & Ours, J.C. van, 2011. "Retaining through Training; Even for OlderWorkers," Discussion Paper 2011-040, Tilburg University, Center for Economic Research.
  3. Picchio, Matteo & van Ours, Jan C., 2010. "Market imperfections and firm-sponsored training," CEPR Discussion Papers 7881, C.E.P.R. Discussion Papers.
  4. Haelermans Carla & Borghans Lex, 2011. "Wage effects of on-the-job training; a meta-analysis," Research Memorandum 054, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. Haelermans Carla & Borghans Lex, 2011. "Wage effects of on-the-job training. A meta-analysis," ROA Research Memorandum 011, Maastricht University, Research Centre for Education and the Labour Market (ROA).

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