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Is Training More Frequent When Wage Compression is Higher? Evidence from the European Community Household Panel

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Author Info

  • Bassanini, Andrea

    () (OECD)

  • Brunello, Giorgio

    () (University of Padova)

Abstract

When labor markets are imperfectly competitive, firms may be willing to finance general training if the wage structure is compressed, that is, if the increase of productivity after training is greater than the increase in pay. We propose a novel way of testing this proposition, which exploits the variation in training incidence and in the training wage premium within the European Union. Our results unambiguously show that (general) training incidence is higher in clusters – defined by country, sector, occupation and educational attainment – with a lower training wage premium, measured as the differential between the median wage growth of trained and untrained employees.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 839.

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Length: 41 pages
Date of creation: Aug 2003
Date of revision:
Publication status: published as "Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel" in: Labour Economics, 2008, 15(2), 272-290
Handle: RePEc:iza:izadps:dp839

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Related research

Keywords: wage compression; ECHP; training;

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References

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  1. Goux, Dominique & Maurin, Eric, 2000. "Returns to firm-provided training: evidence from French worker-firm matched data1," Labour Economics, Elsevier, vol. 7(1), pages 1-19, January.
  2. Neumark, David & Wascher, William, 2001. "Minimum Wages and Training Revisited," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 563-95, July.
  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. Adam J. Grossberg & Paul Sicilian, 1999. "Minimum Wages, On-the-Job Training, and Wage Growth," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 539-556, January.
  5. Jorn-Steffen Pischke, 1996. "Continuous Training in Germany," NBER Working Papers 5829, National Bureau of Economic Research, Inc.
  6. 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.
  7. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2003. "Comparative Analysis of Firm Demographics and Survival: Micro-Level Evidence for the OECD Countries," OECD Economics Department Working Papers 348, OECD Publishing.
  8. Arulampalam, Wiji & Alison L Booth & Mark L Bryan, 2003. "Work-related Training and the New National Minimum Wage in Britain," Royal Economic Society Annual Conference 2003 9, Royal Economic Society.
  9. Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
  10. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  11. John M. Barron & Mark C. Berger & Dan A. Black, 1999. "Do Workers Pay for On-The-Job Training?," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 235-252.
  12. 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).
  13. Mark A. Loewenstein & James R. Spletzer, 1999. "General and Specific Training: Evidence and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 710-733.
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Citations

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Cited by:
  1. Messer, Dolores & Wolter, Stefan C., 2009. "Money Matters: Evidence from a Large-Scale Randomized Field Experiment with Vouchers for Adult Training," IZA Discussion Papers 4017, Institute for the Study of Labor (IZA).
  2. Jean-François Tremblay, 2010. "Taxation and skills investment in frictional labor markets," International Tax and Public Finance, Springer, vol. 17(1), pages 52-66, February.
  3. Ericson, Thomas, 2004. "The effects of wage compression on training: Swedish empirical evidence," Working Paper Series 2004:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Giorgio Brunello & Francesca Gambarotto, 2004. "Agglomeration Effects on Employer-Provided Training: Evidence from the UK," CESifo Working Paper Series 1150, CESifo Group Munich.
  5. repec:ese:iserwp:2003-23 is not listed on IDEAS
  6. Filipe Almeida-Santos & Karen Mumford, 2006. "Employee Training, Wage Dispersion and Equality in Britain," Discussion Papers 06/14, Department of Economics, University of York.
  7. Tiiu Paas & Marit Hinnosaar & Jaan Masso & Orsolya Szirko, 2004. "Social Protection Systems In The Baltic States," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 26, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  8. Almeida-Santos, Filipe & Mumford, Karen A., 2004. "Employee Training and Wage Compression in Britain," IZA Discussion Papers 1197, Institute for the Study of Labor (IZA).
  9. Giorgio Brunello & Francesca Gambarotto, 2006. "Do Spatial Agglomeration and Local Labor Market Competition Affect Employer - Provided Training? Evidence from the UK," "Marco Fanno" Working Papers 0018, Dipartimento di Scienze Economiche "Marco Fanno".
  10. Andrea Bassanini & Wooseok Ok, 2004. "How do firms' and individuals' incentives to invest in human capital vary across groups?," Working Papers halshs-00194344, HAL.
  11. 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.
  12. Stenberg, Anders, 2006. "Skill needs and continuing vocational training in Sweden," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-109, Social Science Research Center Berlin (WZB).
  13. Rios, Ana R. & Masters, William A. & Shively, Gerald E., 2008. "Linkages between Market Participation and Productivity: Results from a Multi-Country Farm Household Sample," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6145, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  14. Emanuela Ghignoni, 2006. "Human capital, unemployment, and probability of transition to permanent employment in the Italian regional labour markets," Working Papers 93, University of Rome La Sapienza, Department of Public Economics.
  15. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo Group Munich.
  16. Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2003. "Training in Europe," IZA Discussion Papers 933, Institute for the Study of Labor (IZA).

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