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The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data

Author

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  • David Fairris

    (University of California - Riverside)

  • Roberto Pedace

    (Claremont McKenna College)

Abstract

Using data from the National Employer Survey (NES), this study examines the relationship between wages and on-the-job training. Traditional theory argues that workers may finance onthe- job human capital accumulation through lower wages. A binding minimum wage may, therefore, reduce workplace training if it prevents low-wage workers from offering wage cuts to help finance training. Empirical findings in this area have failed to reach a consensus on the training effects of minimum wages. However, previous research has relied primarily on survey data from individual workers, which typically possess poor measures of job training and little information about the characteristics of firms. Unlike previous research, this study addresses the issue of minimum wages and on-the-job training with a unique employer survey. We find strong evidence to suggest that minimum wages are associated with a reduction in the percentage of an establishment’s workforce receiving training, but only weak evidence indicating that minimum wages reduce the average number of hours establishments devote to training activities.

Suggested Citation

  • David Fairris & Roberto Pedace, "undated". "The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data," Claremont Colleges Working Papers 2000-36, Claremont Colleges.
  • Handle: RePEc:clm:clmeco:2000-36
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    File URL: http://www.claremontmckenna.edu/rdschool/papers/2000-36.pdf
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    References listed on IDEAS

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    Cited by:

    1. David Neumark, 2009. "Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity," NBER Working Papers 14807, National Bureau of Economic Research, Inc.
    2. Grimshaw, Damian., 2011. "What do we know about low wage work and low wage workers? : Analysing the definitions, patterns, causes and consequences in international perspective," ILO Working Papers 994648583402676, International Labour Organization.
    3. repec:eee:labeco:v:47:y:2017:i:c:p:149-162 is not listed on IDEAS
    4. Eva Lajtkepová, 2010. "Minimum Wage and Labour Market," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2010(1), pages 3-20.
    5. Meier, Benjamin & Shadle, Kyrstin & Kreider, Brent E. & Orazem, Peter F, 2018. "Minimum Wages and Occupational Skills Acquired During High School," ISU General Staff Papers 201802260800001037, Iowa State University, Department of Economics.
    6. David Neumark & Olena Nizalova, 2007. "Minimum Wage Effects in the Longer Run," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    7. HARA Hiromi, 2015. "The Effects of Minimum Wages on Training," Discussion papers 15075, Research Institute of Economy, Trade and Industry (RIETI).
    8. repec:eee:labeco:v:47:y:2017:i:c:p:163-181 is not listed on IDEAS
    9. Tobias Haepp & Carl Lin, 2017. "How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1057-1080, November.
    10. Mussaddeq Chowdhury & Roberto Pedace, 2007. "Ethnic Enclaves And Labor Markets: An Analysis Of Immigrant Outcomes In California," Contemporary Economic Policy, Western Economic Association International, vol. 25(2), pages 238-249, April.
    11. Cardoso, Ana Rute, 2009. "Long-Term Impact of Youth Minimum Wages: Evidence from Two Decades of Individual Longitudinal Data," IZA Discussion Papers 4236, Institute for the Study of Labor (IZA).
    12. Papps, Kerry L., 2014. "Career Wage Profiles and the Minimum Wage," IZA Discussion Papers 8421, Institute for the Study of Labor (IZA).
    13. Yanick Labrie & Claude Montmarquette, 2005. "La formation qualifiante et transférable en milieu de travail," CIRANO Project Reports 2005rp-04, CIRANO.

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