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Is Training More Frequent When the Wage Premium is Smaller?: Evidence from the European Community

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  • Andrea Bassanini
  • Giorgio Brunello

Abstract

According to Becker [1964], when labour markets are perfectly competitive, general training is paid by the worker, who reaps all the benefits from the investment. Therefore, ceteris paribus, the greater the training wage premium, the greater the investment in general training. Using data from the European Community Household Panel, we compute a proxy of the training wage premium in clusters of homogeneous workers and find that smaller premia induce greater incidence of off-site training, which is likely to impart general skills. Our findings suggest that the Becker model provides insufficient guidance to understand empirical training patterns. Conversely, they are not inconsistent with theories of training in imperfectly competitive labour markets, in which firms may be willing to finance general training if the wage structure is compressed, that is, if the increase in productivity after training is greater than the increase in pay. Dans la théorie de Becker [1964], lorsque le marché du travail est en concurrence parfaite, seuls les salariéss investissent dans la formation générale, car ils sont les seuls à pouvoir s’approprier les retombées bénéfiques de la formation. Par conséquent, toutes choses égales par ailleurs, plus la prime salariale à la formation est élevée et plus l’investissement en formation est importante. Sur la base des données du Panel Communautaire des Ménages, nous calculons une proxy de la prime salariale à la formation pour des groupes homogènes de salariés et nous trouvons une relation inverse entre cette proxy et l’incidence de la formation hors site, qui concerne, selon toute vraisemblance, des compétences relativement générales. Nos résultats suggèrent que le modèle de Becker ne fournit pas une clé interprétative suffisante pour comprendre les tendances empiriques de la formation. Par contre, la distribution de la formation ne semble pas être en contradiction avec les théories de la formation qui prévoient que, lorsque le marché du travail est en concurrence imparfaite, les entreprises peuvent être disposées à investir en formation si l’augmentation de la productivité qui en découle est supérieure à l’augmentation du salaire.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Social, Employment and Migration Working Papers with number 41.

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Date of creation: 05 Dec 2006
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Handle: RePEc:oec:elsaab:41-en

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Cited by:
  1. Bassanini, Andrea & Brunello, Giorgio, 2008. "Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel," Labour Economics, Elsevier, vol. 15(2), pages 272-290, April.
  2. 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".
  3. Peter Huber & Ulrike Huemer, 2009. "What Causes Gender Differences in the Participation and Intensity of Lifelong Learning?," WIFO Working Papers 353, WIFO.
  4. 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).

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