Are there asymmetries in the effects of training on the conditional male wage distribution?

Abstract

Recent studies have used quantile regression (QR) techniques to estimate the impact of education on the location, scale and shape of the conditional wage distribution. We conduct a similar investigation of the role of work-related training. We utilise both ordinary least squares and QR techniques to estimate associations between work-related training and wages for private sector men in ten European Union countries. For the majority of countries, the association between training and hourly wages varies little across the conditional wage distribution. However, there are considerable differences across countries in mean associations between training and wages. Budria and Pereira (2005) and Angrist, Chernozhukov and Fernandez-Val (2006) use QR techniques to disaggregate the returns to education by education level. They find that the widening returns to education over the wage distribution are driven largely by the widening returns to collegeeducated individuals.Our purpose in the present paper is to see if there is also an upward-sloping profile for training across the conditional wages distribution. Education and work-related training are complementary, as numerous studies attest (see Arulampalam, Booth and Bryan, 2004 and references therein). Hence we might expect to observe an upward sloping profile when we graph the training association across quantiles of the conditional wage 1 For surveys of articles estimating the mean returns to training, see Ashenfelter and Lalonde (1996) and for the mean returns to education, see Card (1999). However, it is possible that skills packages offered by firms to workers might differ across the wage distribution in ways that are unobservable to the econometrician. For example, any complementarities between unobserved ability and work-related training might result in an upward-sloping profile when we graph the training correlation across quantiles of the conditional wages distribution. Moreover, training courses offered by firms to workers are likely to vary in their degree of specificity or generality. Training that is specific and partially firm-financed will produce lower individual wage-returns than selffinanced general training. Using the harmonised ECHP data, we can measure the more formal types with our training measure and on-the-job training with our tenure measure.But we cannot hope to capture the skill-mix heterogeneity of training courses offered by firms, not least because the training indicators typically combine different training types 2 Although there has been a recent surge in the estimation of wage equations using quantile regression techniques (see Fitzenberger, et al, 2001, for some applications), to our knowledge there are no studies investigating the association between work-related training and the conditional wage distribution. 3There is an extensive literature on the evaluation of particular labour market programmes, using a variety of techniques. For example, Heckman et al. (1994) estimate the average effects of training on the treated, Hec...

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

“…Using decomposition analysis they find training is positively associated with wage dispersion. However, this finding is in contrast with finding by Arulampalam et al (2010) who find the association between training and hourly wages varies little across the conditional wage distribution for the majority of countries in EU. Of course, their sample is different since they focus only on private sector men and so our estimates are not comparable.…”

“…Since the years of schooling is significantly related to monthly wage at each quantile and the QR estimates do not differ significantly across all quantiles, it can be concluded that years of schooling only affects the location of the conditional wage distribution. The findings are not consistent with previous findings by Arulampalam et al (2010), Budría and Pereira (2004) in which education is associated with increased dispersion of the conditional wage distribution. The observed negative sign of the QR estimates of work experiencesquared, EXP2 in all the five quantiles indicates that the monthly wage increases at a decreasing rate as years of work experience increase.…”

“…training might be associated with more complex changes in the conditional wage distribution is very limited. According to Arulampalam et al (2010) there are no studies investigating the association between work-related training and the conditional wage distribution. They use quantile regression techniques (Koenker & Bassett 1978) to document the heterogeneity in the way wages respond to variations in those variables which are normally expected to affect them -gender, human capital, firm attributes and industry indicators (Mincer 1974).…”

“…education might be associated with more complex changes in the conditional wage distribution but according to Arulampalam et al (2010) there are no studies investigating the association between work-related training and the conditional wage distribution. This paper aims to analyse the complex factors of wage determination focusing on the impact of training on wages using the QR technique based on the Workers' Competitiveness Survey data in selected services sector namely Information and Communication Technology (ICT), Health, and Education in Malaysia.…”

Heterogeneous Returns to Training

“…Dearden, Reed andVan Reenen, 2000 andArulampalam, Booth andBryan, 2004). Therefore, heterogeneity in training returns cannot only be explained by differences in productivity effects of training, but also by differences in individual, firm, and job characteristics which relate to the bargaining power of employer and employee.…”