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The Impact of Aggregate and Sectoral Fluctuations on Training Decisions

Author

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  • Caponi, Vincenzo
  • Kayahan, Cevat Burc
  • Plesca, Miana

Abstract

The literature has not yet resolved whether the effect of macroeconomic fluctuations on training decisions is positive or negative. On the one hand, the opportunity cost to train is lower during downturns, and thus training should be counter-cyclical. On the other hand, a positive shock may be related to the adoption of new technologies and increased returns to skill, making training incidence pro-cyclical. Using the Canadian panel of Workplace and Employee Survey (WES), we document another important channel at work: the relative position of a sector also matters. We find not only that training moves counter-cyclically with the aggregate business cycle (more training during downturns), but also that the idiosyncratic sectoral shocks have a positive impact on training incidence (more training in sectors doing relatively better). These findings help us better understand training decisions by firms.

Suggested Citation

  • Caponi, Vincenzo & Kayahan, Cevat Burc & Plesca, Miana, 2009. "The Impact of Aggregate and Sectoral Fluctuations on Training Decisions," CLSSRN working papers clsrn_admin-2009-54, Vancouver School of Economics, revised 25 Oct 2009.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2009-54
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    File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2045%20-%20Caponi,%20Kayahan%20and%20Plesca.pdf
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    References listed on IDEAS

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    1. Miana Plesca & Gueorgui Kambourov & Iourii Manovskii, 2005. "Returns to Government Sponsored Training," 2005 Meeting Papers 521, Society for Economic Dynamics.
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    Cited by:

    1. Hector Sala & José Silva, 2013. "Labor productivity and vocational training: evidence from Europe," Journal of Productivity Analysis, Springer, vol. 40(1), pages 31-41, August.

    More about this item

    Keywords

    Training; Human capital; Business cycles; Sectoral shocks;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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