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Who invests in training if contracts are temporary? - Empirical evidence for Germany using selection correction

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Jan Sauermann

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Abstract

This study deals with the effect of fixed-term contracts on work-related training. Though previous studies found a negative effect of fixed-term contracts on the participation in training, from the theoretical point of view it is not clear whether workers with fixed-term contracts receive less or more training, compared to workers with permanent contracts. In addition to the existing strand of literature, we especially distinguish between employer- and employee-financed training in order to allow for diverging investment patterns of worker and firm. Using data from the German Socio-Economic Panel (GSOEP), we estimate a bivariate probit model to control for selection effects that may arise from unobservable factors, affecting both participation in training and holding fixed-term contracts. Finding negative effects for employer-sponsored, as well as for employee-sponsored training, leads us to conclude that workers with fixed-term contracts do not compensate for lower firm investments.

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Paper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 14-06.

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Date of creation: Jul 2006
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Handle: RePEc:iwh:dispap:14-06

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Related research
Keywords: training; fixed-term contracts; bivariate probit model;

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Find related papers by JEL classification:
C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Boockmann, Bernhard & Hagen, Tobias, 2005. "Fixed-term Contracts as Sorting Mechanisms: Evidence From Job Durations in West Germany," ZEW Discussion Papers 05-85, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  2. Jennifer Hunt, 1994. "Firing Costs, Employment Fluctuations and Average Employment: An Examination of Germany," NBER Working Papers 4825, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Jörn-Steffen Pischke, 2001. "Continuous training in Germany," Journal of Population Economics, Springer, vol. 14(3), pages 523-548. [Downloadable!] (restricted)
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  4. Cecilia Albert & Carlos García-Serrano & Virginia Hernanz, 2004. "Firm-provided training and temporary contracts," Spanish Economic Review, Springer, vol. 7(1), pages 67-88, January. [Downloadable!] (restricted)
  5. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February. [Downloadable!] (restricted)
  6. Edwin Leuven, 2005. "The Economics of Private Sector Training: A Survey of the Literature," Journal of Economic Surveys, Blackwell Publishing, vol. 19(1), pages 91-111, 02. [Downloadable!] (restricted)
  7. Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2003. "Training in Europe," IZA Discussion Papers 933, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Steven McIntosh, 1999. "A Cross-Country Comparison of the Determinants of Vocational Training," CEP Discussion Papers dp0432, Centre for Economic Performance, LSE. [Downloadable!]
  9. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9. [Downloadable!] (restricted)
  10. Eng Loh, 1994. "Employment probation as a sorting mechanism," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(3), pages 471-486, April.
  11. Alison L. Booth & Marco Francesconi & Jeff Frank, 2000. "Temporary Jobs: Who gets them, what are they worth, and do they lead anywhere?," ILR working papers 054, Institute for Labour Research. [Downloadable!]
  12. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-58, December. [Downloadable!] (restricted)
  13. Acemoglu, D. & Pischki, J.S., 1996. "Why Do Firms Train? Theory and Evidence," Working papers 96-7, Massachusetts Institute of Technology (MIT), Department of Economics.
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  14. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June. [Downloadable!] (restricted)
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  15. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Blackwell Publishing, vol. 64(3), pages 445-64, July. [Downloadable!] (restricted)
  16. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1409-1448, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eva Reinowski & Jan Sauermann, 2008. "Hat die Befristung von Arbeitsverträgen einen Einfluss auf die Weiterbildung geringqualifiziert beschäftigter Personen?," IWH Discussion Papers 2-08, Halle Institute for Economic Research. [Downloadable!]
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