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Training Subsidies and the Wage Returns to Continuing Vocational Training: Evidence from Italian Regions

Author

Listed:
  • Brunello, Giorgio

    () (University of Padova)

  • Comi, Simona

    () (University of Milan Bicocca)

  • Sonedda, Daniela

    () (University of Piemonte Orientale)

Abstract

We use the variation of training policy over time and across Italian regions to identify the relationship between individual training and earnings. Using longitudinal data for the period 1999 to 2005, we find that the marginal effect of one additional week of formal training on monthly earnings is 4.4 percent. This effect declines rapidly over time and is equal to 0.86 percent 10 years after the investment. We also find that marginal returns are higher among small firms, which are more likely to be constrained by lack of economic resources in their training decisions. Since small firms train less than large firms, their higher returns from the training induced by training policies can simply reflect decreasing marginal returns to training.

Suggested Citation

  • Brunello, Giorgio & Comi, Simona & Sonedda, Daniela, 2010. "Training Subsidies and the Wage Returns to Continuing Vocational Training: Evidence from Italian Regions," IZA Discussion Papers 4861, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4861
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    References listed on IDEAS

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    1. Ann P. Bartel, 1992. "Training, Wage Growth and Job Performance: Evidence From a Company Database," NBER Working Papers 4027, National Bureau of Economic Research, Inc.
    2. David S. Lee, 2005. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," NBER Working Papers 11721, National Bureau of Economic Research, Inc.
    3. Dearden, Lorraine & Reed, Howard & Van Reenen, John, 2000. "Who Gains when Workers Train? Training and Corporate Productivity in a Panel of British Industries," CEPR Discussion Papers 2486, C.E.P.R. Discussion Papers.
    4. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    5. Bartel, Ann P, 1995. "Training, Wage Growth, and Job Performance: Evidence from a Company Database," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 401-425, July.
    6. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
    7. Parent, Daniel, 1999. "Wages and Mobility: The Impact of Employer-Provided Training," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 298-317, April.
    8. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
    9. Edwin Leuven & Hessel Oosterbeek, 2008. "An alternative approach to estimate the wage returns to private-sector training," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(4), pages 423-434.
    10. Ballot, Gerard & Fakhfakh, Fathi & Taymaz, Erol, 2001. "Firms' human capital, R&D and performance: a study on French and Swedish firms," Labour Economics, Elsevier, vol. 8(4), pages 443-462, September.
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    Cited by:

    1. repec:zbw:rwirep:0553 is not listed on IDEAS
    2. Paweł Strawiński & Paulina Broniatowska & Aleksandra Majchrowska, 2016. "Returns to vocational education. Evidence from Poland," Working Papers 2016-16, Faculty of Economic Sciences, University of Warsaw.
    3. Görlitz, Katja & Tamm, Marcus, 2015. "The Pecuniary and Non-pecuniary Returns to Voucher-financed Training," Ruhr Economic Papers 553, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Katja Görlitz & Marcus Tamm, 2015. "The Pecuniary and Non-pecuniary Returns to Voucher-financed Training," Ruhr Economic Papers 0553, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Jonathan Barr & Emma Clarence & Francesca Froy & Sergio Destefanis & Chris Warhurst, 2012. "Local Job Creation: How Employment and Training Agencies Can Help - The Labour Agency of the Autonomous Province of Trento, Italy," OECD Local Economic and Employment Development (LEED) Working Papers 2012/17, OECD Publishing.
    6. Floreani, Vincent Arthur, 2014. "Fixing Europe's youth unemployment and skills mismatch, can public financial support to SMEs be effective? The case of the European Commission and European Investment Bank joint initiatives," MPRA Paper 55849, University Library of Munich, Germany.

    More about this item

    Keywords

    training; training policies; Italy;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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