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The Impact of Work-Related Training on Employee Earnings: Evidence from Great Britain

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  • Panos, Sousounis
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    Abstract

    Using data from the British Household Panel Survey for the years 1998-2005, this study estimates the impact of work-related training on earnings levels. Different measures for general and specific training are constructed from available information. The analysis diverges from the standard fixed effects framework for earnings determination modelling and presents evidence in support of the predictions of the standard human capital theory with regards to training sponsoring using a random effects formulation for the earnings equation suggested by Nijman and Verbeek (1992) for controlling for attrition bias in unbalanced panels.

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    File URL: http://mpra.ub.uni-muenchen.de/14262/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14262.

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    Date of creation: 2009
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    Handle: RePEc:pra:mprapa:14262

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    Keywords: work-related training; human capital; earnings;

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    1. 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.
    2. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    3. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
    4. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Non-response in panel data: The impact on estimates of a life cycle consumption function," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153282, Tilburg University.
    5. Booth, Alison L, 1993. "Private Sector Training and Graduate Earnings," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 164-70, February.
    6. Daron Acemoglu & Jorn-Steffen Pischke, 1996. "Why Do Firms Train? Theory and Evidence," NBER Working Papers 5605, National Bureau of Economic Research, Inc.
    7. Filipe Almeida-Santos & Karen Mumford, . "Employee Training and Wage Compression in Britain," Discussion Papers 04/11, Department of Economics, University of York.
    8. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
    9. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
    10. Booth, Alison L & Francesconi, Marco & Zoega, Gylfi, 1999. "Training, Rent-Sharing and Unions," CEPR Discussion Papers 2200, C.E.P.R. Discussion Papers.
    11. 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.
    12. Booth, Alison L. & Francesconi, Marco & Zoega, Gylfi, 2003. "Unions, Work-Related Training, and Wages: Evidence for British Men," IZA Discussion Papers 737, Institute for the Study of Labor (IZA).
    13. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
    14. 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.
    15. Richard Blundell & Lorraine Dearden & Costas Meghir & Barbara Sianesi, 1999. "Human capital investment: the returns from education and training to the individual, the firm and the economy," Fiscal Studies, Institute for Fiscal Studies, vol. 20(1), pages 1-23, March.
    16. Melero Martín, Eduardo, 2004. "Evidence on Training and Career Paths: Human Capital, Information and Incentives," IZA Discussion Papers 1377, Institute for the Study of Labor (IZA).
    17. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    18. 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).
    19. Clifton, J., 1997. "Constraining Influences on the Decision to Participate in Training: The Importance of the Non-Work Environment," Papers 97-25, Cornell - Center for Advanced Human Resource Studies.
    20. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
    21. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
    22. Vella, F. & Verbeek, M.J.C.M., 1994. "Two-step estimation of simultaneous equation panel data models with censored endogenous variables," Discussion Paper 1994-55, Tilburg University, Center for Economic Research.
    23. Gershuny, Jonathan, 2005. "Busyness as the badge of honour for the new superordinate working class," ISER Working Paper Series 2005-09, Institute for Social and Economic Research.
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