Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Notes on contributors
- Prologue
- Part I Measuring the benefits from human capital
- 1 What should you know about the private returns to education?
- 2 The social returns to education
- 3 Returns to training
- 4 Human capital and entrepreneurs
- 5 The effects of education on health
- 6 Are successful parents the secret to success?
- Part II Applying and extending the human capital model
- Part III Policy interventions
- Epilogue: some reflections on educational policies
- A note on econometrics
- Index
- References
3 - Returns to training
Published online by Cambridge University Press: 22 September 2009
By
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Notes on contributors
- Prologue
- Part I Measuring the benefits from human capital
- 1 What should you know about the private returns to education?
- 2 The social returns to education
- 3 Returns to training
- 4 Human capital and entrepreneurs
- 5 The effects of education on health
- 6 Are successful parents the secret to success?
- Part II Applying and extending the human capital model
- Part III Policy interventions
- Epilogue: some reflections on educational policies
- A note on econometrics
- Index
- References
Summary
Introduction
There is a steadily growing literature that investigates the determinants of individual wage growth over the lifecycle. Understanding wage growth is important for a number of reasons: first, wages are the major determinant of individual welfare; second, because observed wage growth can have several theoretical explanations and distinguishing between these increases our understanding of the functioning of labour markets; and finally, an often mentioned reason is that different components of wage growth are informative about the extent to which wages are tied to jobs, which in turn is a measure of the cost of worker displacement.
The two basic wage growth patterns that have been studied in this context are (i) how wages increase with experience, and (ii) how wages increase with tenure, keeping experience constant. The observed patterns can, however, have many sources. A first explanation is human-capital-based and conjectures that wage growth mirrors productivity growth. A second mechanism that generates wage growth is job search and matching (Jovanovic, 1979a, b; Mortensen, 1978). The intuition is simple: good matches are more likely to survive which generate a positive relation between experience/tenure and wages. All wage growth comes from mobility between jobs rather than from increases in productivity because of human capital investment. Finally contractual considerations can cause wage profiles to slope upwards because postponing rewards can provide an incentive to workers to exert effort early on.
Distinguishing between these alternative explanations of lifecycle wage patterns has proved to be a daunting task.
- Type
- Chapter
- Information
- Human CapitalAdvances in Theory and Evidence, pp. 38 - 51Publisher: Cambridge University PressPrint publication year: 2007
References
and (1987). Job duration, seniority, and earnings. American Economic Review, 77 (3): 278–97.Google Scholar
and (1999). The structure of wages and investment in general training. Journal of Political Economy, 107 (3): 539–72.CrossRefGoogle Scholar
and (1987). Do wages rise with job seniority? Review of Economic Studies, 54: 437–59.CrossRefGoogle Scholar
and (1991). Worker characteristics, job characteristics, and the receipt of on-the-job training. Industrial and Labor Relations Review, 45: 58–79.CrossRefGoogle Scholar
(2001). Why do temporary help firms provide free general skills training? Quarterly Journal of Economics, 116 (4): 1409–48.CrossRefGoogle Scholar
, and (1987). Employer size: the implications for search, training, capital investment, starting wages, and wage growth. Journal of Labor Economics, 5 (1): 76–89.CrossRefGoogle Scholar
, and (1997a). On the Job Training. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.CrossRefGoogle Scholar
, and (1997b). How well do we measure training? Journal of Labor Economics, 15 (3): 507–28.CrossRefGoogle Scholar
, and (1999). Do workers pay for on-the-job training? Journal of Human Resources, 34 (2): 235–52.CrossRefGoogle Scholar
(1995). Training, wage growth, and job performance: evidence from a company database. Journal of Labor Economics, 13: 401–25.CrossRefGoogle Scholar
(1962). Investment in human capital: a theoretical analysis. Journal of Political Economy, 70: 9–49.CrossRefGoogle Scholar
Bishop, J. (1994). The impact of previous training on productivity and wages, in (ed.), Training and the Private Sector: International Comparisons, NBER Comparative Labor Markets Series. Chicago: University of Chicago Press.CrossRefGoogle Scholar
Bishop, J. H. (1991). On-the-job training of new hires, in and (eds.), Market Failure in Training? New Economic Analysis and Evidence on Training of Adult Employees. New York: Springer Verlag.CrossRefGoogle Scholar
Blanchflower, D. and L. Lynch (1994). Training at work: a comparison of U.S. and British youths, in (ed.), Training and the Private Sector: International Comparisons, NBER Comparative Labor Markets Series. Chicago: University of Chicago Press.CrossRefGoogle Scholar
, and (1996). The Determinants and Effects of Work Related Training in Britain. London: Institute of Fiscal Studies.Google Scholar
(1991). Job-related formal training: who receives it and what is it worth? Oxford Bulletin of Economics and Statistics, 53: 281–94.CrossRefGoogle Scholar
(1993). Private sector training and graduate earnings. Review of Economics and Statistics, 75 (1): 164–70.CrossRefGoogle Scholar
(1989). Why do wages increase with job tenure? On-the-job training and life-cycle wage growth observed within firms. American Economic Review, 79 (5): 971–91.Google Scholar
and (1979). On-the-job training and earnings differences by race and sex. Review of Economics and Statistics, 61: 594–603.CrossRefGoogle Scholar
Frazis, H., M. Gittleman, M. Horrigan and M. Joyce (1996). Formal and informal training: evidence from a matched employee–employer survey. Paper prepared for the conference ‘New Empirical Research on Employer Training: Who Pays?’ held at Cornell University, 15–17 November 1996.
Frazis, H. and M. Loewenstein (2003). Reexamining the returns to training: functional form, magnitude, and interpretation. Working Paper 367, Bureau of Labor Statistics, Washington DC.
and (1987). The effects and determinants of training. Oxford Bulletin of Economics and Statistics, 49: 171–89.CrossRefGoogle Scholar
and (1994). Identification and estimation of local average treatment effects. Econometrica, 62 (2): 467–75.CrossRefGoogle Scholar
(1979a). Firm-specific capital and turnover. Journal of Political Economy, 87: 1246–60.CrossRefGoogle Scholar
(1979b). Job matching and the theory of turnover. Journal of Political Economy, 87: 972–90.CrossRefGoogle Scholar
(1999). How long do the benefits of training last? Evidence of long term effects across current and previous employers. Research in Labor Economics, 18: 439–61.CrossRefGoogle Scholar
Leuven, E. and H. Oosterbeek (2002). A new method to estimate the returns to work-related training. Unpublished Working Paper, Department of Economics, University of Amsterdam.
and (2005). Evaluating the effects of a tax deducation on training. Journal of Human Resources, 40 (2): 453–76.Google Scholar
, , and (2005). Worker reciprocity and employer investment in training. Economica, 72 (285): 137–49.CrossRefGoogle Scholar
and (1992). Private sector training: who gets it and what are its effects? Research in Labor Economics, 13: 1–62.Google Scholar
and (1997). Delayed formal on-the-job training. Industrial and Labor Relations Review, 51 (1): 82–99.CrossRefGoogle Scholar
and (1999). Formal and informal training: evidence from the NLSY. Research in Labour Economics, 18: 403–38.CrossRefGoogle Scholar
(1992). Private sector training and the earnings of young workers. American Economic Review, 82 (1): 299–312.Google Scholar
and (1998). Beyond the incidence of employer-provided training. Industrial and Labor Relations Review, 52 (1): 64–81.CrossRefGoogle Scholar
and (1980). Experience, performance, and earnings. Quarterly Journal of Economics, 85: 703–36.CrossRefGoogle Scholar
and (1981). Are those paid more really more productive? The case of experience. Journal of Human Resources, 16 (2): 186–216.CrossRefGoogle Scholar
(1978). Specific capital and labor turnover. Bell Journal of Economics, 9: 572–85.CrossRefGoogle Scholar
(1999). Wages and mobility: the impact of employer-provided training. Journal of Labor Economics, 17 (2): 298–317.CrossRefGoogle Scholar
(2001). Continuous training in Germany. Journal of Population Economics, 14: 523–48.CrossRefGoogle Scholar
(1994). A theoretical model of on-the-job training with imperfect competition. Oxford Economic Papers, 46: 537–62.CrossRefGoogle Scholar
and (1960). Regression-discontinuity analysis: an alternative to ex post facto experiment. Journal of Educational Psychology, 51: 309–17.CrossRefGoogle Scholar
(1986). Job mobility, search, and earnings growth: a reinterpretation of human capital earnings functions. Research in Labor Economics, 8: 199–233.Google Scholar
(1991). Specific capital, mobility, and wages: wages rise with job seniority. Journal of Political Economy, 99 (1): 145–76.CrossRefGoogle Scholar
(1995). Sources of training and their impact on wages. Industrial and Labor Relations Review, 48 (4): 812–26.CrossRefGoogle Scholar
- 2
- Cited by