The Impact of Aggregate and Sectoral Fluctuations on Training Decisions

Vincenzo Caponi, Burc Kayahan () and Miana Plesca ()

CLSSRN working papers from Vancouver School of Economics

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.

Keywords: Training; Human capital; Business cycles; Sectoral shocks (search for similar items in EconPapers)
JEL-codes: E32 J24 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2009-10-25, Revised 2009-10-25
New Economics Papers: this item is included in nep-hrm and nep-lab
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Related works:
Journal Article: The Impact of Aggregate and Sectoral Fluctuations on Training Decisions (2010)
Working Paper: The Impact of Aggregate and Sectoral Fluctuations on Training Decisions (2010)
Working Paper: The Impact of Aggregate and Sectoral Fluctuations on Training Decisions (2009)
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