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On the Incidence of Employment Subsidies to Vocational Training

  • Karsten Albæk

    (Department of Economics, University of Copenhagen)

The present paper analyses employment subsidies to vocational training under union wage bargaining. The analysis includes an investigation of the consequences of financing the subsidy by a levy on employment, which is the typical way of financing these types of subsidies in many countries. The paper demonstrates high incidence rates of subsidies to vocational training under standard assumptions about the preference structure of the union. The financing scheme appears to counteract the purpose of the subsidy.

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Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2010-02.

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Length: 10 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:kud:kuieca:2010_02
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  1. Malcomson, James M. & Maw, James W. & McCormick, Barry, 2003. "General training by firms, apprentice contracts, and public policy," European Economic Review, Elsevier, vol. 47(2), pages 197-227, April.
  2. Stevens, M., 1999. "Should Firms be Required to Pay for Vocational Training?," Economics Papers 1999-w4, Economics Group, Nuffield College, University of Oxford.
  3. Dustmann, Christian & Schönberg, Uta, 2004. "Training and Union Wages," IZA Discussion Papers 1435, Institute for the Study of Labor (IZA).
  4. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June.
  5. Calmfors, Lars & Lang, Harald, 1995. "Macroeconomic Effects of Active Labour Market Programmes in a Union Wage-Setting Model," Economic Journal, Royal Economic Society, vol. 105(430), pages 601-19, May.
  6. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 79-119.
  7. repec:oup:qjecon:v:113:y:1998:i:1:p:78-118 is not listed on IDEAS
  8. Farber, Henry S, 1978. "Individual Preferences and Union Wage Determination: The Case of the United Mine Workers," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 923-42, October.
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