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How do firms' and individuals' incentives to invest in human capital vary across groups?


  • Andrea Bassanini

    () (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - CNRS - Centre National de la Recherche Scientifique, CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation) - UP13 - Université Paris 13 - CNRS - Centre National de la Recherche Scientifique)

  • Wooseok Ok

    (ECO - Economics Department - OCDE)


Past research shows that training opportunities are unequally distributed across workers, with workers who are already in a better position in the labour market having more opportunities to acquire new skills. We decompose the downstream training market in order to trace the extent to which differences in the provision of employer-sponsored training across groups of workers are due to demand (by employees) or supply (by employers). The empirical results suggest that employers tend to exclude women, immigrants, young employees, involuntary part-time and temporary workers, workers in low-skilled occupations and workers with low literacy, when selecting which employees to train. By contrast, lower demand appears to account for lower training participation of older and less educated workers. In the case of older workers, labour market imperfections affecting the distribution of training benefits and the length of employers' and employees' pay-back periods are likely to be behind this pattern. In the case of less educated workers, credit constraints and/or training market imperfections – due to lack of training information and contractibility between employers and employees – may partially explain this finding. However, noneconomic factors, such as lesser motivation or bad pedagogical experiences, must also be taken into account. Finally, demand does not appear to vary with firm size or sector. However, supply rises with firm size, perhaps due to lower unit costs of training, larger benefits, and greater access to credit and information for large firms.

Suggested Citation

  • Andrea Bassanini & Wooseok Ok, 2004. "How do firms' and individuals' incentives to invest in human capital vary across groups?," CEPN Working Papers halshs-00194344, HAL.
  • Handle: RePEc:hal:cepnwp:halshs-00194344
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    References listed on IDEAS

    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
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    3. John Chiwuzulum Odozi & Timothy Taiwo Awoyemi & Bolarin Titus Omonona, 2010. "Household poverty and inequality: the implication of migrants' remittances in Nigeria," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(2), pages 191-199.
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    7. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    8. repec:dau:papers:123456789/4711 is not listed on IDEAS
    9. John Chiwuzulum Odozi & Timothy Taiwo Awoyemi & Bolarin Titus Omonona, 2010. "Household poverty and inequality: the implication of migrants' remittances in Nigeria," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(2), pages 191-199.
    10. Barham, Bradford & Boucher, Stephen, 1998. "Migration, remittances, and inequality: estimating the net effects of migration on income distribution," Journal of Development Economics, Elsevier, vol. 55(2), pages 307-331, April.
    11. Flore Gubert & Thomas Lassourd & Sandrine Mesplé-Somps, 2010. "Transferts de fonds des migrants, pauvreté et inégalités au Mali. Analyse à partir de trois scénarios contrefactuels," Revue économique, Presses de Sciences-Po, vol. 61(6), pages 1023-1050.
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    Cited by:

    1. Didier Fouarge & Trudie Schils & Andries de Grip, 2013. "Why do low-educated workers invest less in further training?," Applied Economics, Taylor & Francis Journals, vol. 45(18), pages 2587-2601, June.
    2. Gerhard Reinecke & Damian Grimshaw, 2015. "Labour market inequality between youth and adults: a special case?," Chapters,in: Labour Markets, Institutions and Inequality, chapter 14, pages 361-398 Edward Elgar Publishing.
    3. Arntz, Melanie & Gregory, Terry & Zierahn, Ulrich, 2016. "ELS issues in robotics and steps to consider them. Part 1: Robotics and employment. Consequences of robotics and technological change for the structure and level of employment," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 146501.
    4. repec:ilo:ilowps:486283 is not listed on IDEAS
    5. Guerrazzi, Marco, 2014. "Workforce ageing and the training propensity of Italian firms: cross-sectional evidence from the INDACO survey," MPRA Paper 56826, University Library of Munich, Germany.
    6. Katrin Breuer & Patrick Kampkoetter, 2012. "Do Employees Reciprocate to Intra-Firm Trainings? An Analysis of Absenteeism and Turnover Rates," Cologne Graduate School Working Paper Series 03-09, Cologne Graduate School in Management, Economics and Social Sciences.
    7. Giuseppe Croce & Massimiliano Tancioni, 2007. "Disentangling factors behind training partecipation in Italy," Working Papers 101, University of Rome La Sapienza, Department of Public Economics.
    8. Grimshaw, Damian., 2014. "At work but earning less : trends in decent pay and minimum wages for young people," ILO Working Papers 994862833402676, International Labour Organization.
    9. Janine Berg (ed.), 2015. "Labour Markets, Institutions and Inequality," Books, Edward Elgar Publishing, number 16143.


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