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How do firms' and individuals' incentives to invest in human capital vary across groups?

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, CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation) - UP13 - Université Paris 13 - CNRS - Centre National de la Recherche Scientifique)

  • Wooseok Ok

    (ECO - Economics Department - OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development)

Abstract
Past research shows that training opportunities are unequally distributed across workers, with workers who are already in a better position in the labour market having more opportunities to acquire new skills. We decompose the downstream training market in order to trace the extent to which differences in the provision of employer-sponsored training across groups of workers are due to demand (by employees) or supply (by employers). The empirical results suggest that employers tend to exclude women, immigrants, young employees, involuntary part-time and temporary workers, workers in low-skilled occupations and workers with low literacy, when selecting which employees to train. By contrast, lower demand appears to account for lower training participation of older and less educated workers. In the case of older workers, labour market imperfections affecting the distribution of training benefits and the length of employers' and employees' pay-back periods are likely to be behind this pattern. In the case of less educated workers, credit constraints and/or training market imperfections – due to lack of training information and contractibility between employers and employees – may partially explain this finding. However, noneconomic factors, such as lesser motivation or bad pedagogical experiences, must also be taken into account. Finally, demand does not appear to vary with firm size or sector. However, supply rises with firm size, perhaps due to lower unit costs of training, larger benefits, and greater access to credit and information for large firms.

Suggested Citation

  • Andrea Bassanini & Wooseok Ok, 2004. "How do firms' and individuals' incentives to invest in human capital vary across groups?," Working Papers halshs-00194344, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00194344
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00194344
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    References listed on IDEAS

    as
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    Cited by:

    1. Didier Fouarge & Trudie Schils & Andries de Grip, 2013. "Why do low-educated workers invest less in further training?," Applied Economics, Taylor & Francis Journals, vol. 45(18), pages 2587-2601, June.
    2. repec:ilo:ilowps:486283 is not listed on IDEAS
    3. Francesca Sgobbi, 2016. "Train the worst or train the best? The determinants of employer-sponsored training in five European countries," Working Papers 29, Birkbeck Centre for Innovation Management Research, revised Jan 2016.
    4. Katrin Breuer & Patrick Kampkoetter, 2012. "Do Employees Reciprocate to Intra-Firm Trainings? An Analysis of Absenteeism and Turnover Rates," Cologne Graduate School Working Paper Series 03-09, Cologne Graduate School in Management, Economics and Social Sciences.
    5. Janine Berg (ed.), 2015. "Labour Markets, Institutions and Inequality," Books, Edward Elgar Publishing, number 16143.
    6. Giuseppe Croce & Massimiliano Tancioni, 2007. "Disentangling factors behind training partecipation in Italy," Working Papers in Public Economics 101, Department of Economics and Law, Sapienza University of Roma.
    7. Andrea Filippetti & Frederick Guy & Simona Iammarino, 2015. "Does training help in times of crisis? Training in employment in Northern and Southern Italy," Working Papers 28, Birkbeck Centre for Innovation Management Research, revised Dec 2015.
    8. Grimshaw, Damian., 2014. "At work but earning less : trends in decent pay and minimum wages for young people," ILO Working Papers 994862833402676, International Labour Organization.
    9. Gerhard Reinecke & Damian Grimshaw, 2015. "Labour market inequality between youth and adults: a special case?," Chapters, in: Janine Berg (ed.), Labour Markets, Institutions and Inequality, chapter 14, pages 361-398, Edward Elgar Publishing.
    10. Iammarino, Simona & Guy, Frederick & Filippetti, Andrea, 2019. "Regional disparities in the effect of training on employment," LSE Research Online Documents on Economics 87466, London School of Economics and Political Science, LSE Library.
    11. Maarten Goos & Melanie Arntz & Ulrich Zierahn & Terry Gregory & Stephanie Carretero Gomez & Ignacio Gonzalez Vazquez & Koen Jonkers, 2019. "The Impact of Technological Innovation on the Future of Work," JRC Working Papers on Labour, Education and Technology 2019-03, Joint Research Centre.
    12. Guerrazzi, Marco, 2014. "Workforce ageing and the training propensity of Italian firms: cross-sectional evidence from the INDACO survey," MPRA Paper 56826, University Library of Munich, Germany.
    13. Arntz, Melanie & Gregory, Terry & Zierahn, Ulrich, 2016. "ELS issues in robotics and steps to consider them. Part 1: Robotics and employment. Consequences of robotics and technological change for the structure and level of employment," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 146501.

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