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

Author

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  • Kuckulenz Anja
  • Maier Michael

    (Centre for European Economic Research (ZEW), Department Labour Markets, Human Resources and Social Policy, P.O. Box 10 3443, D-68034 Mannheim, Germany)

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.

Suggested Citation

  • Kuckulenz Anja & Maier Michael, 2006. "Heterogeneous Returns to Training: An Analysis with German Data Using Local Instrumental Variables," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 24-40, February.
    • Handle: RePEc:jns:jbstat:v:226:y:2006:i:1:p:24-40
    DOI: 10.1515/jbnst-2006-0104
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    References listed on IDEAS

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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 06-025, ZEW - Leibniz Centre for European Economic Research.
    2. Benedikte Bjerge & Nina Torm & Neda Trifković, 2016. "Gender matters: Private sector training in Vietnamese SMEs," WIDER Working Paper Series wp-2016-149, World Institute for Development Economic Research (UNU-WIDER).
    3. Benedikte Bjerge & Nina Torm & Neda Trifkovic, 2016. "Gender matters: Private sector training in Vietnamese SMEs," WIDER Working Paper Series 149, World Institute for Development Economic Research (UNU-WIDER).
    4. Kuckulenz, Anja, 2006. "Continuing Vocational Training in Germany: A Comparative Study Using 3 German Data Set," ZEW Discussion Papers 06-024, ZEW - Leibniz Centre for European Economic Research.

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