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Heterogeneous Returns to Training : an Analysis with German Data Using Local Instrumental Variables

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  • Anja Kuckulenz

    () (Centre for European Economic Research)

  • Michael Maier

    () (Centre for European Economic Research)

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    Abstract

    Empirical work on the wage impact of training has noted that unobserved heterogeneity of training participants should play a role. The expected return to training, which partly depends on unobservable characteristics, is likely to be a crucial criterion in the decision to take part in training or not. We try to account for this fact by using recent advances in estimating returns to schooling, which allow for selection on unobservables, and apply it to estimating the impact of training on earnings. Allowing heterogeneity to be unobserved by the econometrician, but assuming that individuals may act upon this heterogeneity, completely changes the interpretation and properties of commonly used estimators. Our results based on local instrumental variables suggest that traditional estimates of the wage impact of training overestimate this effect.

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    Bibliographic Info

    Paper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 04-03.

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    Length: 25 pages
    Date of creation: 20 Jan 2006
    Date of revision:
    Handle: RePEc:knz:hetero:0603

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    Related research

    Keywords: Vocational training ; treatment effects ; semiparametric estimation ; Local instrumental variables;

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    Cited by:
    1. Kuckulenz, Anja, 2006. "Wage and Productivity Effect of Continuing Training in Germany: A Sectoral Analysis," ZEW Discussion Papers 06-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Kuckulenz, Anja, 2006. "Continuing Vocational Training in Germany: A Comparative Study Using 3 German Data Set," ZEW Discussion Papers 06-24, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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