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Is Training More Frequent When the Wage Premium Is Smaller ?

Author

Listed:
  • Andrea Bassanini

    (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - UP2 - Université Panthéon-Assas - CNRS - Centre National de la Recherche Scientifique)

  • Giorgio Brunello

    (Dipartimento di Economia "Marco Fanno" - Unipd - Università degli Studi di Padova = University of Padua)

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.

Suggested Citation

  • Andrea Bassanini & Giorgio Brunello, 2006. "Is Training More Frequent When the Wage Premium Is Smaller ?," Post-Print halshs-00129742, HAL.
    • Handle: RePEc:hal:journl:halshs-00129742
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00129742
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    Cited by:

    1. Sara Serra, 2016. "Temporary contracts' transitions: the role of training and institutions," Working Papers w201611, Banco de Portugal, Economics and Research Department.
    2. Bassanini, Andrea & Brunello, Giorgio, 2008. "Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel," Labour Economics, Elsevier, vol. 15(2), pages 272-290, April.

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