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Training and Human Capital

Author

Listed:
  • Miana Plesca

    (University of Guelph)

  • Iourii Manovskii

    (University of Pennsylvania)

  • Gueorgui Kambourov

    (University of Toronto)

Abstract

The rapidly growing literature studying the returns to firm- and government-sponsored training has made a striking observation. Returns to firm-sponsored training are positive and large while returns to government-sponsored training are low or even negative, especially in the short run. This has sparked considerable research interest in studying why government-sponsored training is so ineffective. In this paper we re-evaluate the motivating evidence. We show that there is a clear selection issue overlooked by the existing literature. In particular, a large fraction of the participants in government-sponsored training are occupation switchers, while most of the participants in firm-sponsored training are occupation stayers. Since a switch of an occupation involves a substantial destruction of human capital, the associated decline in wages needs to be accounted for. Once we do this, we find large positive impact of training on workers' human capital. The magnitude of this effect is similar for training sponsored by the firm and the government.

Suggested Citation

  • Miana Plesca & Iourii Manovskii & Gueorgui Kambourov, 2010. "Training and Human Capital," 2010 Meeting Papers 1263, Society for Economic Dynamics.
    • Handle: RePEc:red:sed010:1263
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    Cited by:

    1. Caponi Vincenzo & Kayahan Burc & Plesca Miana, 2010. "The Impact of Aggregate and Sectoral Fluctuations on Training Decisions," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-37, October.
    2. Jones, Stephen, 2012. "The Effectiveness of Training for Displaced Workers with Long Prior Job Tenure," CLSSRN working papers clsrn_admin-2012-3, Vancouver School of Economics, revised 29 Jan 2012.
    3. Núria Rodríquez-Planas, 2011. "Displacement, Signaling, and Recall Expectations," Working Papers 550, Barcelona School of Economics.

    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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