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Train to gain – The benefits of employee-financed training in Germany

  • Harald U. Pfeifer

    ()

    (Federal Institute for Vocational Education and Training, Bonn)

Individual returns on continuing vocational training have been in the focus of many empirical and theoretical papers. Most of the works do not explicitly discuss returns to training that is financed fully or partly by the employee. This seems surprising since several publicly funded programs to increase training participation aim at a stronger employee involvement in the financing of continuing vocational training. This paper analyses the participation in and the determinants and effects of employee-financed training using German panel data. The question is addressed, which employees invest and which benefit from training. Results show that employee-investment in training yields only moderate wage returns and has no significant impact on the further career development, especially when compared to the effects of enterprise-financed training. On the other hand, employees financing their own training gain in terms of unemployment risk reduction and the improvement in the matching of individual skills and job requirements.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0037_lhwpaper.pdf
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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0037.

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Length: 32 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:iso:educat:0037
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  1. Polachek, Solomon W. & Robst, John, 1998. "Employee labor market information: comparing direct world of work measures of workers' knowledge to stochastic frontier estimates," Labour Economics, Elsevier, vol. 5(2), pages 231-242, June.
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  9. Uschi Backes-Gellner & Johannes Mure, 2005. "The Skill-Weights Approach on Firm Specific Human Capital: Empirical Results for Germany," Working Papers 0056, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Apr 2005.
  10. Anja Kuckulenz, 2006. "Wage and Productivity Effect of Continuing Training in Germany : A Sectoral Analysis," Working Papers of the Research Group Heterogenous Labor 06-06, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
  11. Lorraine Dearden & Howard Reed & John Van Reenen, 2005. "The impact of training on productivity and wages: evidence from British panel data," IFS Working Papers W05/16, Institute for Fiscal Studies.
  12. Acemoglu, Daron & Pischke, Jörn-Steffen, 1998. "The Structure of Wages and Investment in General Training," CEPR Discussion Papers 1833, C.E.P.R. Discussion Papers.
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  17. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-58, December.
  18. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  19. Michael Gerfin & Robert E. Leu & Reto Nyffeler, 2003. "Berufliche Weiterbildung in der Schweiz," Diskussionsschriften dp0318, Universitaet Bern, Departement Volkswirtschaft.
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