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

  • Andrea Bassanini

    ()

    (OECD and EPEE)

  • Giorgio Brunello

    ()

    (University of Padova, IZA and CESifo)

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.

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File URL: http://epee.univ-evry.fr/RePEc/2005/05-03.pdf
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Paper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 05-03.

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Length: 43 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:eve:wpaper:05-03
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