Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp526.html
   My bibliography  Save this paper

A New Approach to Estimate the Wage Returns to Work-Related Training

Author

Listed:
  • Leuven, Edwin

    (University of Oslo)

  • Oosterbeek, Hessel

    (University of Amsterdam)

Abstract
This paper proposes a new approach to identify the wage effects of training. The idea is to narrow down the comparison group by only taking into consideration the workers who wanted to participate in training but did not do so because of some random event. The point estimate of the return to training consistently drops when restricting the comparison group this way. While the OLS estimate of the return to training participation is significantly positive, this is no longer the case when we use the new comparison group. This outcome suggests that a large share of what is usually interpreted as returns to training is actually the return to some unobservable characteristic.

Suggested Citation

  • Leuven, Edwin & Oosterbeek, Hessel, 2002. "A New Approach to Estimate the Wage Returns to Work-Related Training," IZA Discussion Papers 526, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp526
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp526.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Edwin Leuven & Hessel Oosterbeek, 2004. "Evaluating the Effect of Tax Deductions on Training," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 461-488, April.
    2. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    3. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    4. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-562, October.
    5. Joshua D. Angrist & Guido W. Imbens & D.B. Rubin, 1993. "Identification of Causal Effects Using Instrumental Variables," NBER Technical Working Papers 0136, National Bureau of Economic Research, Inc.
    6. Booth, Alison L, 1993. "Private Sector Training and Graduate Earnings," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 164-170, February.
    7. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    8. John M. Barron & Mark C. Berger & Dan A. Black, 1999. "Do Workers Pay for On-The-Job Training?," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 235-252.
    9. Jonathan R. Veum, 1995. "Sources of Training and Their Impact on Wages," ILR Review, Cornell University, ILR School, vol. 48(4), pages 812-826, July.
    10. Stephen H. Bell & Larry l. Orr & John D. Blomquist & Glen G. Cain, 1995. "Program Applicants as a Comparison Group in Evaluating Training Programs: Theory and a Test," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number pacg, December.
    11. Greenhalgh, Christine & Stewart, Mark, 1987. "The Effects and Determinants of Training," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(2), pages 171-190, May.
    12. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
    13. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dimitris Pavlopoulos & Ruud Muffels & Jeroen K. Vermunt, 2009. "Training and Low‐pay Mobility: The Case of the UK and the Netherlands," LABOUR, CEIS, vol. 23(s1), pages 37-59, March.
    2. Benoit Mahy & Mélanie Volral, 2011. "Firm Training and Labour Demand in Belgium :Does Productivity Dominate Cost Effects ?," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 54(4), pages 367-388.
    3. Rita Almeida & Marta Faria, 2014. "The wage returns to on-the-job training: evidence from matched employer-employee data," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-33, December.
    4. Beblavý, Miroslav & Thum, Anna-Elisabeth & Potjagailo, Galina, 2013. "When do adults learn? A cohort analysis of adult education in Europe," CEPS Papers 8059, Centre for European Policy Studies.
    5. Grit Muehler & Michael Beckmann & Bernd Schauenberg, 2007. "The returns to continuous training in Germany: new evidence from propensity score matching estimators," Review of Managerial Science, Springer, vol. 1(3), pages 209-235, November.
    6. Uschi Backes-Gellner & Johannes Mure & Simone Tuor, 2006. "The Puzzle of Non-Participation in Continuing Training – An Empirical Study of Permanent vs. Occasional Non-Participation," Working Papers 0058, University of Zurich, Institute for Strategy and Business Economics (ISU).
    7. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
    8. Kuckulenz Anja & Maier Michael, 2006. "Heterogeneous Returns to Training: An Analysis with German Data Using Local Instrumental Variables," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 24-40, February.
    9. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income," OECD Economics Department Working Papers 925, OECD Publishing.
    10. Pfeifer, Christian & Janssen, Simon & Yang, Philip & Backes-Gellner, Uschi, 2011. "Effects of Training on Employee Suggestions and Promotions in an Internal Labor Market," IZA Discussion Papers 5671, Institute of Labor Economics (IZA).
    11. Hendrik Jürges & Kerstin Schneider, 2005. "Dynamische Lohneffekte beruflicher Weiterbildung," MEA discussion paper series 05092, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    12. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
    13. Asplund, Rita, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy.
    14. George Gelauff & Arjan Lejour, 2006. "Five Lisbon highlights; the economic impact of reaching these targets," CPB Document 104.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Backes-Gellner, Uschi & Mure, Johannes & Tuor, Simone N., 2007. "The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 295-311.
    16. Bellmann Lutz & Ellguth Peter, 2006. "Verbreitung von Betriebsräten und ihr Einfluss auf die betriebliche Weiterbildung / Works Council Presence and Impact on Training of the Workforce," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(5), pages 487-504, October.
    17. Gelauff, George & Lejour, Arjan, 2006. "The new Lisbon Strategy: An estiamtion of the impact of reaching 5 Lisbon targets," MPRA Paper 16168, University Library of Munich, Germany.
    18. Rita Asplund, 2005. "The Provision and Effects of Company Training: A Brief Review of the Literature," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 47-73.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo.
    2. Edwin Leuven & Hessel Oosterbeek, 2008. "An alternative approach to estimate the wage returns to private-sector training," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(4), pages 423-434.
    3. Yanick Labrie & Claude Montmarquette, 2005. "La formation qualifiante et transférable en milieu de travail," CIRANO Project Reports 2005rp-04, CIRANO.
    4. Hidalgo, Diana & Oosterbeek, Hessel & Webbink, Dinand, 2014. "The impact of training vouchers on low-skilled workers," Labour Economics, Elsevier, vol. 31(C), pages 117-128.
    5. Bert Minne & Marc van der Steeg & Dinand Webbink, 2008. "Skill gaps in the EU: role for education and training policies," CPB Document 162, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Asplund, Rita, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy.
    7. Dan A. Black & Lars Skipper & Jeffrey A. Smith & Jeffrey Andrew Smith, 2023. "Firm Training," CESifo Working Paper Series 10268, CESifo.
    8. Cecilia ALBERT & Carlos GARCÍA-SERRANO & Virginia HERNANZ, 2010. "On-the-job training in Europe: Determinants and wage returns," International Labour Review, International Labour Organization, vol. 149(3), pages 315-341, September.
    9. Grit Muehler & Michael Beckmann & Bernd Schauenberg, 2007. "The returns to continuous training in Germany: new evidence from propensity score matching estimators," Review of Managerial Science, Springer, vol. 1(3), pages 209-235, November.
    10. Salas-Velasco, Manuel, 2009. "Beyond lectures and tutorials: Formal on-the-job training received by young European university graduates," Research in Economics, Elsevier, vol. 63(3), pages 200-211, September.
    11. Michael Gerfin & Robert E. Leu & Reto Nyffeler, 2003. "Berufliche Weiterbildung in der Schweiz," Diskussionsschriften dp0318, Universitaet Bern, Departement Volkswirtschaft.
    12. Edwin Leuven & Hessel Oosterbeek, 2004. "Evaluating the Effect of Tax Deductions on Training," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 461-488, April.
    13. Rita Asplund, 2005. "The Provision and Effects of Company Training: A Brief Review of the Literature," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 47-73.
    14. Michael Gerfin, 2003. "Work-Related Training and Wages: An empirical analysis for male workers in Switzerland," Diskussionsschriften dp0316, Universitaet Bern, Departement Volkswirtschaft.
    15. Said Hanchane & Audrey Dumas, 2008. "The Impact of Job Training on the Performances of Moroccan Firms: Empirical Evidence with Firm-Level Panel Data," Economics of Education Working Paper Series 0030, University of Zurich, Department of Business Administration (IBW).
    16. Lorraine Dearden & Howard Reed & John Van Reenen, 2006. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 397-421, August.
    17. John Van Reenen, 2000. "Who gains when workers train? Training and corporate productivity in a panel of British industries," IFS Working Papers W00/04, Institute for Fiscal Studies.
    18. Christian Pfeifer & Simon Janssen & Philip Yang & Uschi Backes-Gellner, 2011. "Effects of Training on Employee Suggestions and Promotions in an Internal Labor Market," Economics of Education Working Paper Series 0061, University of Zurich, Department of Business Administration (IBW).
    19. Mark C. Berger & John S. Earle & Klara Sabirianova, 2001. "Worker Training in a Restructuring Economy: Evidence from the Russian Transition," Book chapters authored by Upjohn Institute researchers, in: Soloman W. Polachek (ed.),Worker Wellbeing in a Changing Labor Market, pages 159-189, W.E. Upjohn Institute for Employment Research.
    20. Christophe Muller & Christophe J. Nordman, 2017. "Wages and on-the-job training in Tunisia," Middle East Development Journal, Taylor & Francis Journals, vol. 9(2), pages 294-318, July.

    More about this item

    Keywords

    treatment effect; returns to training;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp526. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.