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Training Subsidies and the Wage Returns to Continuing Vocational Training: Evidence from Italian Regions

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Author Info

  • Brunello, Giorgio

    ()
    (University of Padova)

  • Comi, Simona

    ()
    (University of Milan Bicocca)

  • Sonedda, Daniela

    ()
    (University of Piemonte Orientale)

Abstract

We use the variation of training policy over time and across Italian regions to identify the relationship between individual training and earnings. Using longitudinal data for the period 1999 to 2005, we find that the marginal effect of one additional week of formal training on monthly earnings is 4.4 percent. This effect declines rapidly over time and is equal to 0.86 percent 10 years after the investment. We also find that marginal returns are higher among small firms, which are more likely to be constrained by lack of economic resources in their training decisions. Since small firms train less than large firms, their higher returns from the training induced by training policies can simply reflect decreasing marginal returns to training.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4861.

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Length: 44 pages
Date of creation: Apr 2010
Date of revision:
Publication status: published in: Labour Economics, 2012, 19 (3), 361-372
Handle: RePEc:iza:izadps:dp4861

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Related research

Keywords: training; training policies; Italy;

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References

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  1. Dearden, Lorraine & Reed, Howard & Van Reenen, John, 2000. "Who Gains when Workers Train? Training and Corporate Productivity in a Panel of British Industries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2486, C.E.P.R. Discussion Papers.
  2. Edwin Leuven & Hessel Oosterbeek, 2008. "An alternative approach to estimate the wage returns to private-sector training," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 23(4), pages 423-434.
  3. David S. Lee, 2005. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," NBER Working Papers 11721, National Bureau of Economic Research, Inc.
  4. 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.
  5. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
  6. Parent, Daniel, 1999. "Wages and Mobility: The Impact of Employer-Provided Training," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(2), pages 298-317, April.
  7. Ballot, Gerard & Fakhfakh, Fathi & Taymaz, Erol, 2001. "Firms' human capital, R&D and performance: a study on French and Swedish firms," Labour Economics, Elsevier, Elsevier, vol. 8(4), pages 443-462, September.
  8. Ann P. Bartel, 1992. "Training, Wage Growth and Job Performance: Evidence From a Company Database," NBER Working Papers 4027, 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, American Economic Association, vol. 82(1), pages 299-312, March.
  10. Bartel, Ann P, 1995. "Training, Wage Growth, and Job Performance: Evidence from a Company Database," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 13(3), pages 401-25, July.
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Cited by:
  1. Jonathan Barr & Emma Clarence & Francesca Froy & Sergio Destefanis & Chris Warhurst, 2012. "Local Job Creation: How Employment and Training Agencies Can Help - The Labour Agency of the Autonomous Province of Trento, Italy," OECD Local Economic and Employment Development (LEED) Working Papers, OECD Publishing 2012/17, OECD Publishing.
  2. Floreani, Vincent Arthur, 2014. "Fixing Europe's youth unemployment and skills mismatch, can public financial support to SMEs be effective? The case of the European Commission and European Investment Bank joint initiatives," MPRA Paper 55849, University Library of Munich, Germany.

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