Evaluating the effect of tax deductions on training

Edwin Leuven () and Hessel Oosterbeek ()

Labor and Demography from EconWPA

Abstract: Due to a tax law implemented in 1998, Dutch employers can claim an extra tax deduction when they train employees aged 40 years or older. This causes a discontinuity in a firm's cost of training an employee. We exploit this discontinuity to identify two effects: the effect of the tax deduction on training participation, and the effect of training participation on wages. We find that the training rate of workers just above 40 is about 15-20 percent higher than the training rate of workers just below 40. This difference cannot entirely be attributed to the stimulating effect of the tax deduction. Our estimates show that spill- over effects on workers younger than 40 are so substantial that the net effect of the age-dependent tax deduction is zero.

Keywords: Training; wages (search for similar items in EconPapers)
JEL-codes: H30 J24 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pub
Date: 2002-05-08
Note: Type of Document - pdf; pages: 26
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Related works:
Journal Article: Evaluating the Effect of Tax Deductions on Training (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpla:0205001

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