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Who Pays for General Training? New Evidence for British Men and Women

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  • Booth, Alison L.

    ()
    (Australian National University)

  • Bryan, Mark L.

    ()
    (University of Essex)

Abstract

We use important new training information from waves 8-10 of the British Household Panel Survey to document the various forms of work-related training received by men and women over the period 1998-2000, and to estimate their impact on wages. We initially present descriptive information about training: we find that most work-related training is viewed by its recipients as general, that the longest training courses are for induction purposes, that the vast majority of training takes place either at the workplace or at the employer’s training centre, and that most training is paid for by employers. We then estimate the impact of training – controlling for its financing method – on wages levels and wages growth. We find that employer-financed training increases wages both in the current and future firms, with some evidence that the impact in future firms is larger, especially for accredited training. These results are inconsistent with orthodox human capital theory with no credit constraints, but consistent with the relatively recent training literature on training in imperfectly competitive labour markets. They are also consistent with the hypothesis that firms offer credit-constrained workers binding training contracts whereby firms pay for general training and workers repay the ‘loan’ by receiving a post-training wage below their marginal product.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 486.

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Length: 44 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:iza:izadps:dp486

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Keywords: human capital; training; wages;

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References

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  1. Booth, Alison L & Zoega, Gylfi, 1999. "Do Quits Cause Under-Training?," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 374-86, April.
  2. Booth,Alison L. & Snower,Dennis J. (ed.), 1996. "Acquiring Skills," Cambridge Books, Cambridge University Press, number 9780521472050.
  3. Loewenstein, Mark A & Spletzer, James R, 1998. "Dividing the Costs and Returns to General Training," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 142-71, January.
  4. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
  5. Arulampalam, S.W. & Booth, A. & Elias, P., 1995. "Work-Related Training and Earnings Growth for Young Men in Britain," The Warwick Economics Research Paper Series (TWERPS) 440, University of Warwick, Department of Economics.
  6. Booth,Alison L. & Snower,Dennis J. (ed.), 1996. "Acquiring Skills," Cambridge Books, Cambridge University Press, number 9780521479578.
  7. 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.
  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. Arulampalam, Wiji & Booth, Alison L, 2001. "Learning and Earning: Do Multiple Training Events Pay? A Decade of Evidence from a Cohort of Young British Men," Economica, London School of Economics and Political Science, vol. 68(271), pages 379-400, August.
  10. Hart, Robert A. & Ritchie, Felix, 1999. "Tenure-based Wage Setting," IZA Discussion Papers 47, Institute for the Study of Labor (IZA).
  11. Arulampalam, Wiji & Booth, Alison L, 1996. "Who Gets Over the Training Hurdle? A Study of the Training Experiences of Young Men and Women in Britain," CEPR Discussion Papers 1470, C.E.P.R. Discussion Papers.
  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.
  13. 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, December.
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