revised version published as 'Is training more frequent when the wage premium is smaller? Evidence from the European Community Household Panel' in: Labour Economics, 2008, 15(2), 272-290
When labor markets are imperfectly competitive, firms may be willing to finance general
training if the wage structure is compressed, that is, if the increase of productivity after
training is greater than the increase in pay. We propose a novel way of testing this
proposition, which exploits the variation in training incidence and in the training wage
premium within the European Union. Our results unambiguously show that (general) training
incidence is higher in clusters – defined by country, sector, occupation and educational
attainment – with a lower training wage premium, measured as the differential between the
median wage growth of trained and untrained employees.
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