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Training subsidies and the wage returns to continuing vocational training

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<mark>Journal publication date</mark>1/06/2012
<mark>Journal</mark>Labour Economics
Issue number3
Volume19
Number of pages12
Pages (from-to)361-372
Publication StatusPublished
<mark>Original language</mark>English

Abstract

We use the regional and time variation of training grants in Italy to identify the causal effect of (formal continuing vocational) training on earnings. We estimate log-linear earnings regressions with constant marginal returns to training and find that one additional week of training increases monthly net earnings by 1.36%, substantially less than the 3% or more often found in the literature. Estimated returns vary significantly by firm size, and range from 0.40% in firms with more than 100 employees to 2.51% in smaller firms, the bulk of the Italian private sector. A simple back of the envelope comparison of the marginal costs and benefits of training policy suggests that the latter are higher than the former.