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Is Training More Frequent When the Wage Premium Is Smaller? Evidence from the European Community Household Panel

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  • Andrea Bassanini

    () (OECD and EPEE)

  • Giorgio Brunello

    () (University of Padova, IZA and CESifo)

Abstract

According to Becker [1964], when labour markets are perfectly competitive, general training is paid by the worker, who reaps all the benefits from the investment. Therefore, ceteris paribus, the greater the training wage premium, the greater the investment in general training. Using data from the European Community Household Panel, we compute a proxy of the training wage premium in clusters of homogeneous workers and find that smaller premia induce greater incidence of off—site training, which is likely to impart general skills. Our findings suggest that the Becker model provides insufficient guidance to understand empirical training patterns. Conversely, they are not inconsistent with theories of training in imperfectly competitive labour markets, in which firms may be willing to finance general training if the wage structure is compressed, that is, if the increase in productivity after training is greater than the increase in pay.

Suggested Citation

  • Andrea Bassanini & Giorgio Brunello, 2005. "Is Training More Frequent When the Wage Premium Is Smaller? Evidence from the European Community Household Panel," Documents de recherche 05-03, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  • Handle: RePEc:eve:wpaper:05-03
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Picchio, Matteo & van Ours, Jan C., 2013. "Retaining through training even for older workers," Economics of Education Review, Elsevier, vol. 32(C), pages 29-48.
    2. Carla Haelermans & Lex Borghans, 2012. "Wage Effects of On-the-Job Training: A Meta-Analysis," British Journal of Industrial Relations, London School of Economics, vol. 50(3), pages 502-528, September.
    3. Picchio, Matteo & van Ours, Jan C., 2011. "Market imperfections and firm-sponsored training," Labour Economics, Elsevier, vol. 18(5), pages 712-722, October.
    4. Michele Raitano & Francesco Vona, 2017. "Competition, firm size and returns to skills: Evidence from currency shocks and market liberalisations," The World Economy, Wiley Blackwell, vol. 40(12), pages 2676-2703, December.
    5. Peter Huber & Ulrike Huemer, 2015. "Gender Differences in Lifelong Learning: An Empirical Analysis of the Impact of Marriage and Children," LABOUR, CEIS, vol. 29(1), pages 32-51, March.

    More about this item

    Keywords

    general training; off-site training; training wage premia; wage compression; ECHP;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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