Wage and Productivity Effect of Continuing Training in Germany: A Sectoral Analysis

Abstract

Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp06025.pdf Non-technical summaryIn this paper, wage and productivity effects of continuing training are estimated and compared in order to analyse who gains from workers' training. Investments in continuing training are undertaken in order to raise the level of qualification in a firm and to secure its economic performance. Whether these investments in training are profitable to the individual, the firm and society as a whole is still unclear although the question is of considerable importance.Most studies on the productivity impact of training take wages as a proxy for productivity.The focus of this paper is on comparing wage and productivity effects in order to study how the training rent is shared between employers and employees. The use of system GMM techniques allows me to account for endogeneity and time invariant unobserved factors.In more detail, wage and productivity effects are estimated and compared using panel data on the industry level in order to analyse the extent to which employer and employees gain from continuing training. This empirical analysis at the sectoral level suggests that the rent sharing aspect of training is important for employer and employees in Germany. Results show that both employer and employees profit from the investment in human capital. The estimated productivity effects of training are higher, on average, than the wage effects.Since the estimated effect of continuing training on productivity exceeds the effects estimated by comparable studies using firm level data, my results hint to the existence of external effects of training on a sector level, that is, spillovers from training between firms in the same sector.The results of former work suggest that skill group heterogeneity of the training impact on wages should be considered. In order to shed light on this issue and to analyse whether the impacts of participating in training on wages and on productivity differ for low and highly skilled workers, I differentiate between these two groups. This extension enables me to analyse whether there are spillovers between the two skill groups. I test whether training participation of high skilled has an influence on wages of low skilled or the other way around.High skilled workers seem to capture a larger share of the rent than low skilled workers. This result is consistent with former work. In addition, I do not find positive external effects of firm-provided training between skill groups.Wage and Pr...

Continuous training and wages: An empirical analysis using a comparison-group approach

“…This would ignore that training participants attend courses frequently and that training returns are a function of the number of courses in Germany. In addition, such a conclusion would also contradict the literature comparing productivity and wage returns to training using firm data (Dearden et al 2006, Groot 1999, Conti 2005, Ballot et al 2006, Kuckulenz 2006, Konings and Vanormelingen 2009). In almost every of these papers, positive and significant wage effects of training are found.…”

The Impact of Training on the Conditional Wage Distribution in Selected Service Subsectors in Malaysia

“…They find that raising the proportion of workers in an industry who receive training by one percentage point increases value added per worker in the industry by 0.6% and average wages by 0.3%. Kuckulenz (2006) finds for Germany that the impact of continuing training on firm productivity is three times higher than the one on individual wages. Two other interesting studies are Barron et al (1999) and Goux and Maurin (2000).…”

Age Structure of Labour Force and Its Impact on Wages and Product

“…Prskawetz et al, 2007), or industry level (e.g. Kuckulenz, 2006), at organization level (e.g. Göbel, Zwick, 2009) or at individual level (e.g.…”

“…Our data has the form of time series (years 2005-2015) with linear trend. Since the average wages are expressed in real amount (at prices of 2015), they assumptions of the analysis of variance (ANOVA) are valid 8 . This method is the major statistics methods for comparison of our five age groups.…”