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Evaluating the Effect of Tax Deductions on Training

  • Edwin Leuven

    (University of Amsterdam and Tinbergen Institute)

  • Hessel Oosterbeek

    (University of Amsterdam and Tinbergen Institute)

Dutch employers can claim an extra tax deduction when they train employees older than age 40. This discontinuity in a firm's training cost is exploited to identify the tax deduction's effects on training participation and of training participation on wages. The results show that the training rate of workers just above age 40 is 15%20% higher than that of workers just below age 40. This difference mainly results from the postponement of training and is not a stimulating effect of the measure. The two-stage least squares estimate of the wage effect of training is not statistically different from zero.

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File URL: http://dx.doi.org/10.1086/381257
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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 22 (2004)
Issue (Month): 2 (April)
Pages: 461-488

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Handle: RePEc:ucp:jlabec:v:22:y:2004:i:2:p:461-488
Contact details of provider: Web page: http://www.journals.uchicago.edu/JOLE/

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  1. Pischke, Jörn-Steffen, 2000. "Continuous Training In Germany," CEPR Discussion Papers 2428, C.E.P.R. Discussion Papers.
  2. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
  3. repec:eme:rlepps:v:18:y:1999:i:1999:p:303-330 is not listed on IDEAS
  4. Barron, John M & Berger, Mark C & Black, Dan A, 1997. "How Well Do We Measure Training?," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 507-28, July.
  5. Colm Harmon & Ian Walker, 1995. "Estimates of the economic return to schooling for the United Kingdom," Open Access publications 10197/647, School of Economics, University College Dublin.
  6. 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.
  7. Joshua Angrist & Victor Lavy, 1999. "New Evidence on Classroom Computers and Pupil Learning," NBER Working Papers 7424, National Bureau of Economic Research, Inc.
  8. Tomas J. Philipson, 2000. "External Treatment Effects and Program Implementation Bias," NBER Technical Working Papers 0250, National Bureau of Economic Research, Inc.
  9. 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.
  10. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
  11. John Bishop, 1994. "The Impact of Previous Training on Productivity and Wages," NBER Chapters, in: Training and the Private Sector: International Comparisons, pages 161-200 National Bureau of Economic Research, Inc.
  12. repec:sae:ilrrev:v:49:y:1996:i:3:p:505-521 is not listed on IDEAS
  13. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1987. "Employer Size: The Implications for Search, Training, Capital Investment, Starting Wages, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 76-89, January.
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