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On the Returns to Training in Portugal

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Author Info

  • Budría, Santiago

    ()
    (University of Madeira)

  • Pereira, Pedro T.

    ()
    (University of Madeira)

Abstract

This paper investigates the earnings effects of training in the Portuguese labour market. We use the Portuguese Labour Force Survey to classify training according to multiple criteria, including providing institution, purpose, duration, and content of the training activity. First, we establish some stylised facts about the extent and determinants of different types of training. We find that there are major differences in training participation across groups, with elder, low educated workers participating substantially less. Second, we measure the wage effects of training. We find that in Portugal returns to training are large and significant. The estimated coefficients are about 12% in the case of men and 37% in the case of women. We show that discriminating between gender, education level, experience, the public and the private sector, and industrial activity reveals important differences across categories of workers. Workers with low qualifications and long professional experience earn larger returns. On average, women receive larger returns than men, though they are subject to greater variation across education and experience groups. The average effect of training is similar in the private sector and in the public sector. Experience in the private sector and education in the public sector are key determinants of the returns to training. Further, training to improve current skills and training in a firm attract largest returns. Third, the paper investigates whether and to what extent training participation affects the probability of entering and leaving unemployment. We find that being trained does not affect significantly the transition probabilities.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1429.

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Length: 45 pages
Date of creation: Dec 2004
Date of revision:
Publication status: published as "The wage effects of training in Portugal: differences across skill groups, genders, sectors and training types" in: Applied Economics, 2007, 39 (6), 787-807
Handle: RePEc:iza:izadps:dp1429

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Related research

Keywords: returns to training; selection bias; logistic regression;

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References

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  1. Heckman, James J., 2000. "Policies to foster human capital," Research in Economics, Elsevier, vol. 54(1), pages 3-56, March.
  2. Wooseok Ok & Peter Tergeist, 2003. "Improving Workers' Skills: Analytical Evidence and the Role of the Social Partners," OECD Social, Employment and Migration Working Papers 10, OECD Publishing.
  3. Trostel, P. & Walker, I., 2000. "Education and Work," The Warwick Economics Research Paper Series (TWERPS) 554, University of Warwick, Department of Economics.
  4. Zwick, Thomas, 2002. "Continuous Training and Firm Productivity in Germany," ZEW Discussion Papers 02-50, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2004. "Training in Europe," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 346-360, 04/05.
  6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  7. Kuckulenz, Anja & Zwick, Thomas, 2003. "The Impact of Training on Earnings: Differences Between Participant Groups and Training Forms," ZEW Discussion Papers 03-57, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Jorn-Steffen Pischke, 1996. "Continuous Training in Germany," NBER Working Papers 5829, National Bureau of Economic Research, Inc.
  9. 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.
  10. 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.
  11. Vieira, Jose A. C., 1999. "Returns to education in Portugal," Labour Economics, Elsevier, vol. 6(4), pages 535-541, November.
  12. Brunello, Giorgio, 2001. "On the Complementarity between Education and Training in Europe," IZA Discussion Papers 309, Institute for the Study of Labor (IZA).
  13. D. Klepinger & S. Lundberg & R. Plotnick, . "Instrument selection: The case of teenage childbearing and women's educational attainment," Institute for Research on Poverty Discussion Papers 1077-95, University of Wisconsin Institute for Research on Poverty.
  14. Telhado Pereira, Pedro & Silva Martins, Pedro, 2002. "Is there a return-risk link in education?," Economics Letters, Elsevier, vol. 75(1), pages 31-37, March.
  15. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
  16. Booth, Alison L. & Bryan, Mark L., 2002. "Who Pays for General Training? New Evidence for British Men and Women," IZA Discussion Papers 486, Institute for the Study of Labor (IZA).
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Citations

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Cited by:
  1. Ang Boon Heng & Park Cheolsung & Liu Haoming & Shandre M. Thangavelu & James Wong, 2006. "The Impact of Structured Training on Workers’ Employability and Productivity," SCAPE Policy Research Working Paper Series 0702, National University of Singapore, Department of Economics, SCAPE.
  2. 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.
  3. repec:dgr:umamet:2011054 is not listed on IDEAS
  4. 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).
  5. repec:dgr:umaror:2011011 is not listed on IDEAS
  6. Grit Muehler & Michael Beckmann & Bernd Schauenberg, 2007. "The returns to continuous training in Germany: new evidence from propensity score matching estimators," Review of Managerial Science, Springer, vol. 1(3), pages 209-235, November.
  7. Budria, Santiago & Nunes, Celso, 2005. "Education and Wage Inequality in Portugal," MPRA Paper 1099, University Library of Munich, Germany.
  8. repec:tep:teppwp:wp1010 is not listed on IDEAS
  9. Ana Sofia Lopes & Paulino Teixeira, 2013. "Productivity, wages, and the returns to firm-provided training: fair shared capitalism?," International Journal of Manpower, Emerald Group Publishing, vol. 34(7), pages 776 - 793, November.
  10. Arna Chéron & Bénédicte Rouland & François Charles Wolff, 2010. "Returns to firm-provided training in France: Evidence on mobility and wages," Working Papers halshs-00809753, HAL.
  11. repec:iab:iabzaf:v:40:i:2/3:p:295-311 is not listed on IDEAS
  12. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
  13. Ang Boon Heng & Park Cheolsung & Liu Haoming & Shandre M. Thangavelu & James Wong, 2006. "The Impact of Structured Training on Workers’ Employability and Productivity," Labor Economics Working Papers 21918, East Asian Bureau of Economic Research.

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