The Puzzle of Non-Participation in Continuing Training – An Empirical Study of Permanent vs. Occasional Non-Participation

Although participation in continuing vocational training is often found to be associated with considerable individual benefits, a puzzlingly large number of people still do not take part in training. We argue that in order to solve the puzzle it is important to take selection effects into account when studying the returns to education. It has already been established that training participants and non-participants differ in unobservable characteristics and therefore self-select into training or not. We show that even non-participants cannot be treated as a homogeneous group: there are individuals who never take part in training (permanent non-participants) and individuals currently not taking part (occasional non-participants). Using a unique data set of non-participants we separate and compare those two groups. We find that, if they participated, permanent non-participants would have higher costs than occasional non-participants and the benefits associated with their current jobs would be lower. However, even permanent non-participants would benefit from participation in terms of improved prospects on the labor market. The results indicate that permanent non-participants either misperceive future developments or suffer from an exceptionally high discount rate, which in turn leads in their view to a negative cost-benefit ratio for training.