Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel

Andrea Bassanini and Giorgio Brunello

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Abstract: According to Becker [1964], when labour markets are perfectly competitive, general training is paid by the worker, who reaps all the benefits from the investment. Therefore, ceteris paribus, the greater the training wage premium, the greater the investment in general training. Using data from the European Community Household Panel, we compute a proxy of the training wage premium in clusters of homogeneous workers and find that smaller premia induce greater incidence of off-site training, which is likely to impart general skills. Our findings suggest that the Becker model provides insufficient guidance to understand empirical training patterns. Conversely, they are not inconsistent with theories of training in imperfectly competitive labour markets, in which firms may be willing to finance general training if the wage structure is compressed, that is, if the increase in productivity after training is greater than the increase in pay.

Keywords: General training; Off-site training; Training wage premia; Wage compression; ECHP (search for similar items in EconPapers)
Date: 2008
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00214192
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Citations: View citations in EconPapers (14)

Published in Labour Economics, 2008, pp.1-19. ⟨10.1016/j.labeco.2007.01.002⟩

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Journal Article: Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel (2008)
Working Paper: Is Training More Frequent When the Wage Premium Is Smaller? Evidence from the European Community Household Panel (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00214192

DOI: 10.1016/j.labeco.2007.01.002

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