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Should Firms be Required to Pay for Vocational Training?

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  • Stevens, M.

Abstract

This paper constructs a model of a training market affected by both problems, and examines the rationale for training levy schemes, intended to make firms increase investment in vocational training. It is shown that regulating firms, or equivalently financing a subsidy through taxation of profits, can achieve a Pareto improvement irrespective of the cause of the under-investment. However, when the levy is assessed as a proportion of wages the effect is to address capital market imperfections only.

Suggested Citation

  • Stevens, M., 1999. "Should Firms be Required to Pay for Vocational Training?," Economics Papers 1999-w4, Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:econwp:1999-w4
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    References listed on IDEAS

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    1. Jones, Ian, 1988. "An Evaluation of YTS," Oxford Review of Economic Policy, Oxford University Press, vol. 4(3), pages 54-71, Autumn.
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    Cited by:

    1. Olga Kupets, 2018. "Employer‐provided training, innovation and skills in post‐Soviet countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(4), pages 725-768, October.
    2. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
    3. Mohrenweiser, Jens & Zwick, Thomas & Backes-Gellner, Uschi, 2013. "Poaching and firm-sponsored training: First clean evidence," ZEW Discussion Papers 13-037, ZEW - Leibniz Centre for European Economic Research.
    4. Bert Minne & Marc van der Steeg & Dinand Webbink, 2008. "Skill gaps in the EU: role for education and training policies," CPB Document 162, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Picchio, Matteo & van Ours, Jan C., 2011. "Market imperfections and firm-sponsored training," Labour Economics, Elsevier, vol. 18(5), pages 712-722, October.
    6. Yanick Labrie & Claude Montmarquette, 2005. "La formation qualifiante et transférable en milieu de travail," CIRANO Project Reports 2005rp-04, CIRANO.
    7. Naoki Shintoyo, 2010. "Worker‐financed versus Firm‐sponsored Training: How are Skilled Workers Supplied to the Economy?," Economica, London School of Economics and Political Science, vol. 77(305), pages 110-127, January.
    8. Bilanakos, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2018. "Does demand for product quality increase worker training?," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 159-177.
    9. Jens Mohrenweiser & Thomas Zwick & Uschi Backes‐Gellner, 2019. "Poaching and Firm‐Sponsored Training," British Journal of Industrial Relations, London School of Economics, vol. 57(1), pages 143-181, March.
    10. Andrew Sharpe & James Gibson, 2005. "The Apprenticeship System in Canada: Trends and Issues," CSLS Research Reports 2005-04, Centre for the Study of Living Standards.
    11. Espen R. Moen & Åsa Rosén, 2004. "Does Poaching Distort Training?," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1143-1162.
    12. Görg, Holger & Strobl, Eric, 2005. "Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant Level Data," IZA Discussion Papers 1606, Institute of Labor Economics (IZA).
    13. Karsten Albæk, 2010. "On the Incidence of Employment Subsidies to Vocational Training," CAM Working Papers 2010-02, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    14. 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.
    15. Mohrenweiser, Jens, 2016. "Recruitment and apprenticeship training," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 23(1), pages 6-24.
    16. Giulio Pedrini, 2017. "Law and economics of training: a taxonomy of the main legal and institutional tools addressing suboptimal investments in human capital development," European Journal of Law and Economics, Springer, vol. 43(1), pages 83-105, February.
    17. Alexandre Léné, 2002. "Enterprise-related training and poaching externalities," Post-Print halshs-00150509, HAL.
    18. Mitkova, Mariya, 2020. "Social Optimum in a Model with Hierarchical Firms and Endogenous Promotion Time," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224589, Verein für Socialpolitik / German Economic Association.
    19. Andrea Bassanini & Wooseok Ok, 2004. "How do firms' and individuals' incentives to invest in human capital vary across groups?," CEPN Working Papers halshs-00194344, HAL.
    20. Kupets, Olga, 2018. "Investment in human capital in post-Soviet countries: Why are firms not training more?," CEI Working Paper Series 2017-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    21. Suman Ghosh & Kameshwari Shankar, 2017. "Optimal Enforcement Of Noncompete Covenants," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 305-318, January.
    22. Jo Blanden & Franz Buscha & Patrick Sturgis & Peter Urwin, 2010. "Measuring the Returns to Lifelong Learning," CEE Discussion Papers 0110, Centre for the Economics of Education, LSE.
    23. Bilanakosa, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2017. "Worker Training and Quality Competition," GLO Discussion Paper Series 137, Global Labor Organization (GLO).
    24. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo.
    25. Christian Holzner, 2005. "Search Frictions, Credit Constraints and Firm Financed General Training," ifo Working Paper Series 6, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

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    More about this item

    Keywords

    LABOUR MARKET ; TRAINING PROGRAMMES;

    JEL classification:

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

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