Competition, Institutions and Company-sponsored Training
Tina Hinz and
Jens Mohrenweiser ()
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Tina Hinz: Friedrich-Alexander University Erlangen-Nuernberg
No 162, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)
The new training literature argues that imperfect labour markets (i.e. less competition) lead to an increasing productivity-wage wedge. We show that this relation does not hold for all institutional and market environments. We use representative establishment panel data for Germany and apply a control function approach for estimating the production function to correct for endogeneity in input factors. We show that the skill-productivity gradient responds stronger to increases in product market competition and labour market density than the skill-wage gradient. This leads to an increasing productivity-wage wedge in more competitive environments. Similarly, works councils have a stronger effect on the skill-productivity than on the skill-wage gradient while both gradients are similar in the presence of union wage bargaining. Our results call for a more nuanced interpretation of the exposition of the new training literature to understand company-sponsored training across institutional and market environments.
Keywords: training; productivity; wages; wage compression (search for similar items in EconPapers)
JEL-codes: J24 M53 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:iso:educat:0162
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