Sector specificity of training

Human capital acquired through employer-provided training is pervasive in labour markets and an important determinant of post-schooling wage growth. The literature has focused on understanding under what conditions this training will lead to higher wages. Here I offer another aspect for consideration: Does the proximity of the current job to past jobs affect the return to training? In particular, I look at whether the wage return to training acquired at a previous employer depends upon the relative ‘proximity’ of the worker’s past employer to their current one, where proximity is measured by whether the worker received the training in the same industry or occupation as the current job. I investigate this using data from the British Household Panel Survey, with both fixed effects and instrumental variable estimation. The results suggest that both current and previous employer training spells are important determinants of wages, and both need to be included in wage regressions. Evidence further suggests that the return to formal training is highest if the training was received in a previous job that was in the same industry and occupation as the current one.