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A New Approach to estimate the Wage Returns to Work-related Training

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Listed:
  • Edwin Leuven

    (University of Amsterdam)

  • Hessel Oosterbeek

    (University of Amsterdam)

Abstract

This paper proposes a new approach to identify the wage e ects of training.The idea is to narrow down the comparison group by only taking into consideration theworkers who wanted to participate in training but did not do so because of some randomevent. The point estimate of the return to training consistently drops when restrictingthe comparison group this way. While the OLS estimate of the return to training participationis significantly positive, this is no longer the case when we use the new comparisongroup. This outcome suggests that a large share of what is usually interpreted as returnsto training is actually the return to some unobservable characteristic. See also the article in Journal of Applied Econometrics, 2008, 23(4), 423-34.

Suggested Citation

  • Edwin Leuven & Hessel Oosterbeek, 2002. "A New Approach to estimate the Wage Returns to Work-related Training," Tinbergen Institute Discussion Papers 02-091/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020091
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    References listed on IDEAS

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    1. Edwin Leuven & Hessel Oosterbeek, 2004. "Evaluating the Effect of Tax Deductions on Training," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 461-488, April.
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    Cited by:

    1. Dimitris Pavlopoulos & Ruud Muffels & Jeroen K. Vermunt, 2009. "Training and Low‐pay Mobility: The Case of the UK and the Netherlands," LABOUR, CEIS, vol. 23(s1), pages 37-59, March.
    2. Benoit Mahy & Mélanie Volral, 2011. "Firm Training and Labour Demand in Belgium :Does Productivity Dominate Cost Effects ?," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 54(4), pages 367-388.
    3. Rita Almeida & Marta Faria, 2014. "The wage returns to on-the-job training: evidence from matched employer-employee data," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-33, December.
    4. Beblavý, Miroslav & Thum, Anna-Elisabeth & Potjagailo, Galina, 2013. "When do adults learn? A cohort analysis of adult education in Europe," CEPS Papers 8059, Centre for European Policy Studies.
    5. Grit Muehler & Michael Beckmann & Bernd Schauenberg, 2007. "The returns to continuous training in Germany: new evidence from propensity score matching estimators," Review of Managerial Science, Springer, vol. 1(3), pages 209-235, November.
    6. Uschi Backes-Gellner & Johannes Mure & Simone Tuor, 2006. "The Puzzle of Non-Participation in Continuing Training – An Empirical Study of Permanent vs. Occasional Non-Participation," Working Papers 0058, University of Zurich, Institute for Strategy and Business Economics (ISU).
    7. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
    8. Kuckulenz Anja & Maier Michael, 2006. "Heterogeneous Returns to Training: An Analysis with German Data Using Local Instrumental Variables," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 24-40, February.
    9. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income," OECD Economics Department Working Papers 925, OECD Publishing.
    10. Pfeifer, Christian & Janssen, Simon & Yang, Philip & Backes-Gellner, Uschi, 2011. "Effects of Training on Employee Suggestions and Promotions in an Internal Labor Market," IZA Discussion Papers 5671, Institute of Labor Economics (IZA).
    11. Hendrik Jürges & Kerstin Schneider, 2005. "Dynamische Lohneffekte beruflicher Weiterbildung," MEA discussion paper series 05092, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    12. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
    13. Asplund, Rita, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy.
    14. George Gelauff & Arjan Lejour, 2006. "Five Lisbon highlights; the economic impact of reaching these targets," CPB Document 104.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
    16. Bellmann Lutz & Ellguth Peter, 2006. "Verbreitung von Betriebsräten und ihr Einfluss auf die betriebliche Weiterbildung / Works Council Presence and Impact on Training of the Workforce," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(5), pages 487-504, October.
    17. Gelauff, George & Lejour, Arjan, 2006. "The new Lisbon Strategy: An estiamtion of the impact of reaching 5 Lisbon targets," MPRA Paper 16168, University Library of Munich, Germany.
    18. Rita Asplund, 2005. "The Provision and Effects of Company Training: A Brief Review of the Literature," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 47-73.

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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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