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Training subsidies and the wage returns to continuing vocational training

Author

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  • Brunello, Giorgio
  • Comi, Simona Lorena
  • Sonedda, Daniela
Abstract
We use the regional and time variation of training grants in Italy to identify the causal effect of (formal continuing vocational) training on earnings. We estimate log-linear earnings regressions with constant marginal returns to training and find that one additional week of training increases monthly net earnings by 1.36%, substantially less than the 3% or more often found in the literature. Estimated returns vary significantly by firm size, and range from 0.40% in firms with more than 100 employees to 2.51% in smaller firms, the bulk of the Italian private sector. A simple back of the envelope comparison of the marginal costs and benefits of training policy suggests that the latter are higher than the former.

Suggested Citation

  • Brunello, Giorgio & Comi, Simona Lorena & Sonedda, Daniela, 2012. "Training subsidies and the wage returns to continuing vocational training," Labour Economics, Elsevier, vol. 19(3), pages 361-372.
    • Handle: RePEc:eee:labeco:v:19:y:2012:i:3:p:361-372
    DOI: 10.1016/j.labeco.2012.03.002
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    Cited by:

    1. Morikawa, Masayuki, 2021. "Employer-provided training and productivity: Evidence from a panel of Japanese Firms," Journal of the Japanese and International Economies, Elsevier, vol. 61(C).
    2. Belan, Pascal & Chéron, Arnaud, 2014. "Turbulence, training and unemployment," Labour Economics, Elsevier, vol. 27(C), pages 16-29.
    3. Görlitz, Katja & Rzepka, Sylvi, 2014. "Does regional training supply determine employees' training participation?," Discussion Papers 2014/9, Free University Berlin, School of Business & Economics.
    4. Görlitz, Katja & Tamm, Marcus, 2015. "The Pecuniary and Non-Pecuniary Returns to Voucher-Financed Training," IZA Discussion Papers 8990, Institute of Labor Economics (IZA).
    5. Klauser, Roman & Tamm, Marcus, 2023. "Technological Change and Returns to Training," IZA Discussion Papers 16659, Institute of Labor Economics (IZA).
    6. Francis Green & Alan Felstead & Duncan Gallie & Hande Inanc & Nick Jewson, 2016. "The Declining Volume of Workers’ Training in Britain," British Journal of Industrial Relations, London School of Economics, vol. 54(2), pages 422-448, June.
    7. Dan A. Black & Lars Skipper & Jeffrey A. Smith & Jeffrey Andrew Smith, 2023. "Firm Training," CESifo Working Paper Series 10268, CESifo.
    8. Luz Adriana Florez & Lina Cardona-Sosa & Leonardo Fabio Morales & Julian Londoño, 2018. "The Returns from Training in Colombia: Evidence from a Longitudinal Survey," Borradores de Economia 1048, Banco de la Republica de Colombia.
    9. Floreani, Vincent Arthur, 2014. "Fixing Europe's youth unemployment and skills mismatch, can public financial support to SMEs be effective? The case of the European Commission and European Investment Bank joint initiatives," MPRA Paper 55849, University Library of Munich, Germany.
    10. Pedro S. Martins, 2020. "Employee Training and Firm Performance: Quasi-experimental evidence from the European Social Fund," GEE Papers 0152, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jun 2020.
    11. Hara, Hiromi, 2019. "The impact of worker-financed training: Evidence from early- and mid-career workers in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 64-75.
    12. Juan Blyde & Jose Claudio Pires & Marisol Rodríguez Chatruc, 2023. "International trade, job training, and labor reallocation," Review of International Economics, Wiley Blackwell, vol. 31(1), pages 204-236, February.
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    14. Martins, Pedro S., 2021. "Employee training and firm performance: Evidence from ESF grant applications," Labour Economics, Elsevier, vol. 72(C).
    15. Katja Görlitz & Sylvi Rzepka, 2017. "Regional training supply and employees’ training participation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(1), pages 281-296, July.
    16. Görlitz, Katja & Tamm, Marcus, 2016. "The returns to voucher-financed training on wages, employment and job tasks," Economics of Education Review, Elsevier, vol. 52(C), pages 51-62.
    17. Katja Görlitz & Marcus Tamm, 2015. "The Pecuniary and Non-pecuniary Returns to Voucher-financed Training," Ruhr Economic Papers 0553, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    18. Brunello, Giorgio & Comi, Simona, 2015. "The side effect of pension reforms on the training of older workers. Evidence from Italy," The Journal of the Economics of Ageing, Elsevier, vol. 6(C), pages 113-122.

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    More about this item

    Keywords

    Returns to training; Training subsidies;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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