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

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Author Info
Booth, Alison L. () (Australian National University, University of Essex and IZA, Bonn)
Bryan, Mark L. (Australian National University and University of Essex)

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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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Publisher 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: 43 pages
Date of creation: Apr 2002
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Handle: RePEc:iza:izadps:dp486

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Related research
Keywords: training; human capital; wages;

Other versions of this item:

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
I2 - Health, Education, and Welfare - - Education

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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. Wiji Arulampalam & Alison L. Booth, 1997. "Who gets over the training hurdle? A study of the training experiences of young men and women in Britain," Journal of Population Economics, Springer, vol. 10(2), pages 197-217. [Downloadable!] (restricted)
    Other versions:
  2. 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.
  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. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
  5. Hart, Robert A. & Ritchie, Felix, 1999. "Tenure-based Wage Setting," IZA Discussion Papers 47, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June. [Downloadable!] (restricted)
  7. Booth, Alison L & Zoega, Gylfi, 1999. "Do Quits Cause Under-Training?," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 374-86, April.
  8. 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)
  9. 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)
    Other versions:
  10. 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. [Downloadable!] (restricted)
Full references

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. Filipe Almeida-Santos & Karen Mumford, 2006. "Employee Training, Wage Dispersion and Equality in Britain," IZA Discussion Papers 2276, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Rita Asplund, 2005. "The Provision and Effects of Company Training: A Brief Review of the Literature," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 47-73. [Downloadable!]
  3. Andrea Bassanini, 2006. "Training, wages and employment security," Post-Print halshs-00120488_v1, HAL. [Downloadable!]
  4. Bassanini, Andrea & Brunello, Giorgio, 2003. "Is Training More Frequent When Wage Compression Is Higher? Evidence from the European Community Household Panel," IZA Discussion Papers 839, Institute for the Study of Labor (IZA). [Downloadable!]
  5. repec:dgr:uvatin:20020090 is not listed on IDEAS
  6. Harley Frazis & Mark A Loewenstein, 2006. "Wage Compression and the Division of Returns to Productivity Growth: Evidence from EOPP," Working Papers 398, U.S. Bureau of Labor Statistics. [Downloadable!]
  7. Budría, Santiago & Pereira, Pedro Telhado, 2004. "On the Returns to Training in Portugal," IZA Discussion Papers 1429, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Rita Asplund, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy. [Downloadable!]
  9. Lazareva Olga, 2006. "Firm-paid vs. worker-paid on-the-job training in Russia: Determinants and returns," EERC Working Paper Series 06-05e, EERC Research Network, Russia and CIS. [Downloadable!]
  10. Sousounis, Panos & Bladen-Hovell, Robin, 2008. "Persistence in work-related training: evidence from the BHPS, 1991-1998," MPRA Paper 9424, University Library of Munich, Germany. [Downloadable!]
  11. Panos, Sousounis, 2009. "The Impact of Work-Related Training on Employee Earnings: Evidence from Great Britain," MPRA Paper 14262, University Library of Munich, Germany. [Downloadable!]
  12. Blázquez, Maite & Ramos, Jose, 2008. "Recent Investments in Human Capital and its Effect on the Chances of Escaping from Low-Paid Jobs: The Spanish Case," Working Papers in Economic Theory 2008/03, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History). [Downloadable!]
    Other versions:
  13. Harald U. Pfeifer, 2008. "Train to gain – The benefits of employee-financed training in Germany," Economics of Education Working Paper Series 0037, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
  14. Andrea Bassanini, 2003. "Solving the Training Divide," Post-Print halshs-00371379_v1, HAL. [Downloadable!]
  15. Andrea Bassanini & Alison Booth & Giorgio Brunello & Maria De Paola & Edwin Leuven, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA). [Downloadable!]
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