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The Impact of Aggregate and Sectoral Fluctuations on Training Decisions

Author

Listed:
  • Miana Plesca

    (University of Guelph)

  • Cevat Burc Kayahan

    (Acadia University)

  • Vincenzo Caponi

    (Ryerson University)

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.

Suggested Citation

  • Miana Plesca & Cevat Burc Kayahan & Vincenzo Caponi, 2010. "The Impact of Aggregate and Sectoral Fluctuations on Training Decisions," 2010 Meeting Papers 62, Society for Economic Dynamics.
    • Handle: RePEc:red:sed010:62
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    Cited by:

    1. Halima Jibril & Stephen Roper & Mark Hart, 2021. "COVID-19, business support and SME productivity in the UK," Working Papers 005, The Productivity Institute.
    2. Hector Sala & José Silva, 2013. "Labor productivity and vocational training: evidence from Europe," Journal of Productivity Analysis, Springer, vol. 40(1), pages 31-41, August.
    3. Tat‐kei Lai & Travis Ng, 2014. "The impact of product market competition on training provision: Evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(3), pages 856-888, August.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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