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Article
Publication date: 11 November 2013

Ana Sofia Lopes and Paulino Teixeira

The purpose of this paper is to investigate the extent to which the productivity gains associated with workplace training are shared by both the firms concerned and their workers…

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Abstract

Purpose

The purpose of this paper is to investigate the extent to which the productivity gains associated with workplace training are shared by both the firms concerned and their workers. The approach is both theoretical and empirical as an explicit formula for the internal rate of return for firms and workers is derived; and production and cost functions are estimated in conjunction with wage and productivity equations.

Design/methodology/approach

The authors use a unique linked employer-employee longitudinal dataset with detailed information on firm formal training and run regression models to obtain the determinants of the internal rate of return to firm-sponsored training. Analysis of training costs is also provided as well as the econometric framework required to control for firm heterogeneity.

Findings

The results obtained from the model specifications indicate that an additional hour of training per worker results in an increase of 0.12 per cent in productivity and 0.04 per cent in wages, or an increase of 0.16 and 0.08 per cent, respectively, if one uses firm training as a stock variable. It is also found that 82 per cent of the gains in productivity are captured by firms and 18 per cent by workers. Given the training costs, it is obtained an IRR of 13 per cent for firms and 33 per cent for workers at sample means.

Practical implications

Training investments are good otherwise they would not even be considered by firms. However, knowing with greater accuracy the gains captured by firms (and workers) is critical for policy makers in their decision-making process. The estimates found in the paper shows that firm training is a genuinely worthwhile investment for all participants.

Originality/value

The authors derive an explicit formula for the internal rate of return to firm-sponsored training and provide workers’ and firms’ shares of the productivity gains using firm-level data. Another original contribution is that the gains enjoyed by firms are computed as net gains, that is, net of the training costs on the one hand, and net of all the gains accruing to workers through higher wages on the other.

Details

International Journal of Manpower, vol. 34 no. 7
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 17 August 2010

Jens Mohrenweiser and Uschi Backes‐Gellner

The purpose of this paper is to derive an empirical method to identify different types of training strategies of companies based on publicly available company data.

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Abstract

Purpose

The purpose of this paper is to derive an empirical method to identify different types of training strategies of companies based on publicly available company data.

Design/methodology/approach

Using a ten‐year panel, the within‐firm retention rate, defined as the average proportion of apprentices staying in a company in relation to all apprenticeship graduates of a company over several years, was analyzed. The within‐firm retention rate is used to identify these companies' training strategies.

Findings

It was shown that companies' motivation for apprenticeship training in Germany is not homogeneous: 19 percent of all companies follow a substitution strategy and 44 percent follow an investment strategy. The determinants of the substitution strategy were estimated and, for example, sizeable differences were found between sectors with different skill requirements and between firms' coverage of industrial relations.

Research limitations/implications

The method is well suited to classify substitution‐motivated training firms but it is less precise in identifying the investment motivation. Moreover, very small firms which train only one apprentice need longer panel duration for precise results and therefore the classification results are less precise for very small firms.

Practical implications

The classification can be used to identify determinants of company participation in apprenticeship training and to predict changes in demand for apprentices.

Originality/value

A simple and innovative method of identifying different types of training motivation with publicly available company data was derived, which has so far been possible only with very detailed company‐specific apprenticeship surveys.

Details

International Journal of Manpower, vol. 31 no. 5
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 26 April 2013

Samuel Muehlemann, Romy Braendli and Stefan C. Wolter

The paper aims to test whether a firm's provision of training depends on the intake quality of trainees. While a firm may just treat each trainee equally, independent of his or…

Abstract

Purpose

The paper aims to test whether a firm's provision of training depends on the intake quality of trainees. While a firm may just treat each trainee equally, independent of his or her intake quality, firms may alternatively also provide more training to less able individuals or focus on the most able ones. The authors develop a theoretical framework that illustrates under what circumstances a firm chooses a particular training strategy.

Design/methodology/approach

The paper uses representative administrative survey data for more than 1,400 Swiss establishments. To test their theoretical predictions about a firm's training strategy, the authors apply multivariate and instrumental variable (IV) regression models. In addition, they use case study evidence from a large Swiss retailer, allowing them to analyze how different instructors in a specific firm react when confronted with apprentices of different intake qualities.

Findings

The authors find that a firm's training strategy depends on a trainee's intake quality and the expected net costs of a particular training occupation. Although firms generally provide less training to less qualified trainees, the authors find that a firm is willing to compensate low‐ability trainees with additional training when training is on average profitable in the short run.

Practical implications

When training regulations force firms to follow an investment‐oriented training strategy (net costs in the short run), then low‐ability trainees will not receive additional instruction time and the dropout risk increases.

Social implications

Generating a regulatory framework that allows firms to achieve a net benefit from work‐based training is crucial for low‐ability trainees to have the opportunity to receive additional training investments that compensate for a lack of competences when training commences.

Originality/value

This paper provides novel and direct empirical evidence on how firms adjust their training provision when faced with heterogeneity in the ability of their trainees.

Details

Evidence-based HRM: a Global Forum for Empirical Scholarship, vol. 1 no. 1
Type: Research Article
ISSN: 2049-3983

Keywords

Article
Publication date: 3 April 2007

Yannis Georgellis and Thomas Lange

The aim of the paper is to assess the determinants and impact of employer sponsored further training on wage growth in West Germany over the period 1992 to 2002.

689

Abstract

Purpose

The aim of the paper is to assess the determinants and impact of employer sponsored further training on wage growth in West Germany over the period 1992 to 2002.

Design/methodology/approach

Following a descriptive narrative on further training and wages in Germany, data derived from the West German sub‐sample of the German Socio‐Economic Panel is being utilised, which has the main advantage of providing detailed information about the respondents' labour market histories prior to and after 1992. The information provides powerful predictors, controlling for the endogeneity of the training participation decision when estimating a wage growth equation. To assess the impact of training on wages, Heckman selectivity corrected wage equations are used, with the selection being based on a probit model for the probability that an individual receives firm‐sponsored training.

Findings

The analysis provides details of significant gender differences in both, the incidence and earnings impact of further training. The results show that further training has a strong positive effect on wages. However, gender inequality issues remain a salient feature of the German training system, which further training only reinforces. The analysis also suggests that the economic conditions during Germany's post‐unification period may have mitigated some of the potential benefits of further training on wage growth.

Originality/value

Despite its growing importance, the determinants and earnings impact of employer‐sponsored, further training have attracted little attention in the empirical literature. Even less is known about the impact of further training during Germany's post‐unification period. This paper adds value by contributing to this fledgling field of investigation.

Details

International Journal of Manpower, vol. 28 no. 1
Type: Research Article
ISSN: 0143-7720

Keywords

Book part
Publication date: 20 June 2003

Daron Acemoglu and Jörn-Steffen Pischke

Much of the recent debate on the minimum wage has focused on its employment implications. The theory of human capital suggests that minimum wages should also have important…

Abstract

Much of the recent debate on the minimum wage has focused on its employment implications. The theory of human capital suggests that minimum wages should also have important adverse effects on human capital accumulation. In the standard human capital theory, as developed by Becker (1964), Ben-Porath (1967), and Mincer (1974), a large part of human capital is accumulated on the job, and workers often finance these investments through lower wages. A binding minimum wage will therefore reduce workplace training, as it prevents low wage workers from accepting the necessary wage cuts (Rosen, 1972). The early empirical literature has confirmed this prediction. The negative impact on human capital formation has been an important argument against minimum wages in the minds of many economists and policy-makers, and an important piece of evidence in support of the standard theory of human capital.

Details

Worker Well-Being and Public Policy
Type: Book
ISBN: 978-1-84950-213-9

Article
Publication date: 2 September 2021

Naouel Ben Jemaa Cherif

The purpose of this paper is to investigate the impact of training on labor productivity and wages in order to examine how the benefits from training are shared between employers…

Abstract

Purpose

The purpose of this paper is to investigate the impact of training on labor productivity and wages in order to examine how the benefits from training are shared between employers and employees.

Design/methodology/approach

This study analyzes an industry panel covering all sectors of the Tunisian economy for the period 2000–2014. The panel structure of the data allows controlling for the endogeneity of training by using different panel data techniques.

Findings

Results show that both employers and workers benefit from training since it has a positive and significant effect on productivity and wages. However, the effect of training on productivity is substantially higher than on wages, suggesting that employers obtain the largest part of the returns to training. This result is consistent with theories that explain firm-sponsored training by a compressed wage structure in imperfect labor markets.

Originality/value

This study, particularly showcasing the labor market in Tunisia, is one of the first to provide estimates for a developing country to assess the effects of training for both employer and employee. It is also among the few empirical works that analyzed the impact of training on labor productivity and wages simultaneously.

Details

International Journal of Manpower, vol. 43 no. 4
Type: Research Article
ISSN: 0143-7720

Keywords

Book part
Publication date: 21 November 2014

Eduardo Melero

A model of reputation is developed to show how firms operating in concentrated sectors can use the sponsorship of general human capital investments to specifically trained workers…

Abstract

A model of reputation is developed to show how firms operating in concentrated sectors can use the sponsorship of general human capital investments to specifically trained workers as a device of commitment with prospective employees. Employees of firms that operate in concentrated sectors learn skills that are valuable only for a limited number of alternative employers. This gives monopsonistic power to the training firm over the trained workers. Anticipating it, potential employees will be reluctant to work for the firm unless the employer is able to commit oneself’ must be turned back to ‘herself. I argue that human resource policies including the provision of general human capital to workers reduce employers’ commitment costs. Evidence from two representative samples of workers from Spain and the United Kingdom show that, consistent with the predictions of the model, firms from more concentrated sectors are more likely to sponsor their employees’ education.

Details

International Perspectives on Participation
Type: Book
ISBN: 978-1-78441-169-5

Keywords

Article
Publication date: 4 September 2007

Larry Nash White

The purpose of paper one of the two‐article series exploration of human capital assessment is to examine the strategies by which library administrators can assess and benefit the…

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Abstract

Purpose

The purpose of paper one of the two‐article series exploration of human capital assessment is to examine the strategies by which library administrators can assess and benefit the human capital performance of their library and to lay the groundwork for the discussion of the strategic challenges of assessing and valuing human capital in article two.

Design/methodology/approach

This paper uses a literature review to identify potential strategies and metrics for library administrators to assess human capital productivity.

Findings

Human capital is an increasingly essential element of organizational performance assessment. Effectively assessing library staff expenditures (which generally receives the largest expenditure allocations within the library's budget) and the resulting performance generated by the staff, who are the primary knowledge tools and providers of the library's services, is an ever increasing possibility to account for greater amounts of tangible and intangible organizational performance. Library administrators have multiple options for developing effective strategies and metrics by which to assess their libraries human capital performance.

Originality/value

Developing an effective human capital assessment process as a standard component of the library's performance and budgetary assessment processes would benefit libraries and their administrators by increasing the organizational performance information available for resource allocation decisions regarding library staff development, recruitment, and retention in the larger overall management decision making and planning processes.

Details

The Bottom Line, vol. 20 no. 3
Type: Research Article
ISSN: 0888-045X

Keywords

Article
Publication date: 3 April 2017

Samuel Muehlemann and Stefan C. Wolter

The purpose of this paper is to simulate the potential costs and benefits for Spanish firms providing dual apprenticeship training.

Abstract

Purpose

The purpose of this paper is to simulate the potential costs and benefits for Spanish firms providing dual apprenticeship training.

Design/methodology/approach

The paper conducts simulations of ten training occupations in six different industries in Spain. For these simulations, the authors combined Spanish wage data and the existing training curriculum regarding instruction times in vocational school in Spain with data from Swiss firms offering training in similar occupations. These data contain information regarding the amount of workplace training, relative apprentice productivity, and the relative importance of non-wage training costs (such as training equipment).

Findings

The authors found that training occupation, training scenario, and firm size are important determinants of the authors’ simulations for the expected net costs of apprenticeship training in Spanish firms. Consequently, the break-even level of apprentices’ wages differs significantly by training occupation and training scenario, suggesting that one prescribed apprentice wage for all sectors and occupations would be detrimental to the willingness of many firms to provide training places.

Practical implications

Dual apprenticeship training may improve the labor market transition for Spanish youth. The paper provides guidelines for regulatory frameworks that allow firms to provide apprenticeship training without having to bear net training costs – an important condition given that apprentices are free to leave the training firm upon graduation.

Social implications

The authors’ simulations show that Spanish firms would be able to provide high-quality apprenticeship training programs that would also appeal to more talented youth because of the combination of a decent earning opportunity during the apprenticeship and good future career options.

Originality/value

This paper provides novel and direct empirical evidence regarding the framework conditions within the Spanish apprenticeship system, thus incentivizing both firms and individuals to participate in dual apprenticeship training programs.

Details

Evidence-based HRM: a Global Forum for Empirical Scholarship, vol. 5 no. 1
Type: Research Article
ISSN: 2049-3983

Keywords

Article
Publication date: 28 October 2014

Marco Guerrazzi

The purpose of this paper is to take into consideration the propensity to offer vocational training of a large sample of Italian private firms by retrieving cross-sectional data…

Abstract

Purpose

The purpose of this paper is to take into consideration the propensity to offer vocational training of a large sample of Italian private firms by retrieving cross-sectional data from INDACO (2009).

Design/methodology/approach

Estimating a probit model, the author assesses how the age and the gender composition of the employed workforce, as well as a set of relevant corporate characteristics, such as size, sector, geographical location, innovation strategies, R&D investments and use of social safety valves, are linked to the willingness of firms to supply on-the-job training.

Findings

First, as far as the average age of the whole employed workforce is concerned, it was found that the propensity of surveyed firms toward training provision follows an inverted U-shaped pattern. Furthermore, it was shown that larger firms have a higher training propensity with respect to small firms, and the same attitude holds for productive units that adopted innovation strategies and/or invested in R&D projects. By contrast, it was found that the propensity to support training activities is negatively correlated to the percentage of employed women and the use social valves.

Research limitations/implications

The sample of business units taken into consideration is quite large, but it has some biases toward larger and manufacturing firms. Moreover, the cross-sectional perspective of the analysis does not allow implementation of the finer identification procedures that can be applied with panel data. Furthermore, the lack of employer – employee linked data does not allow to fully address the issue of compliance to training activities.

Social implications

From a policy point of view, the results shown throughout the paper suggest some broad guidelines. First, especially in small firms, vocational training for young and older workers should be somehow stimulated. Moreover, as far as mature employees are concerned, those interventions should be framed in an active ageing perspective. Subsidies and targeted job placement programmes are often claimed as being the most appropriate ways to improve the underprivileged position of older workers. However, continuous learning during the whole working life still appears as the most effective device to reduce the employment disadvantages in the older years.

Originality/value

While there are a number of papers that study the age patterns of training participation by using workers’ data retrieved from personnel and/or labour force surveys, this work is the first attempt to provide a probabilistic assessment of the decisions of Italian firms regarding training provision by taking into account the ageing perspectives of the incumbent workforce.

Details

European Journal of Training and Development, vol. 38 no. 9
Type: Research Article
ISSN: 2046-9012

Keywords

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