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Training Funds and the Incidence of Training: The Case of Mauritius

Author

Listed:
  • Kuku, Oluyemisi

    (IFPRI, International Food Policy Research Institute)

  • Orazem, Peter F.

    (Iowa State University)

  • Rojid, Sawkut

    (World Bank)

  • Vodopivec, Milan

    (University of Primorska)

Abstract

Training funds are used to incentivize training in developing countries, but the funds are based on payroll taxes that lower the return to training. In the absence of training funds, larger, high-wage and more capital intensive firms are the most likely to offer training unless they are liquidity constrained. If firms are not liquidity constrained, the fund could lower training investments. Using an administrative dataset on the Mauritius training fund, we find that the firms most likely to train pay more in taxes than they gain in subsidies. The smallest firms receive more benefits than they pay in taxes.

Suggested Citation

  • Kuku, Oluyemisi & Orazem, Peter F. & Rojid, Sawkut & Vodopivec, Milan, 2015. "Training Funds and the Incidence of Training: The Case of Mauritius," IZA Discussion Papers 8775, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8775
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    References listed on IDEAS

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    More about this item

    Keywords

    training; general skills; firm-specific skills; training fund; externality; cross-subsidy; tax;
    All these keywords.

    JEL classification:

    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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