Wages and Mobility: The Impact of Employer-Provided Training

TLDR: In this article, the authors examined the impact of on-the-job training on the wage profile and the mobility of young Americans making their transition to the labor market using data from the National Longitudinal Survey of Youth (NLSY).

Abstract: Using data from the National Longitudinal Survey of Youth (NLSY) for the period spanning the years 1979-1991, this essay examines the impact of employer-provided formal training on the wage profile and on the mobility of young Americans making their transition to the labor market. By exploiting the longitudinal aspect of the data set, we are able to provide some control for unobserved individual and job-match heterogeneity by making use of the methodology proposed by Altonji and Shakotko (ReStud '87). The results show that (i) training with the current employer has a statistically and economically significant positive effect on the wage; (ii) employers seem to reward skills acquired through training with previous employers as much as skills they provide themselves; (iii) workers undergoing training have 18 percent lower starting salaries than other workers; this result is obtained by setting up a starting wage equation and by making use of a variable called on-the-job training still in progress at the time of the interview; (iv) with a hazard model which makes use of multiple employment spells by the same worker (thereby allowing the implementation of fixed-effects methods akin to the conditional logit method), skills acquired through formal training programs provided by the current employer seem to be fairly specific. The upshot from these results is that formal on-the-job-training in the current job contains both a general component which the employer rewards up to its market value and a specific component which reduces mobility while not being rewarded. En utilisant des donnees americaines du National Longitudinal Survey of Youth (NLSY), cette etude s'attarde a examiner l'impact de la formation dispensee par l'employeur sur le profil salarial ainsi que sur la mobilite des jeunes travailleurs faisant leur entree sur le marche du travail. En exploitant l'aspect longitudinal de l'echantillon de facon a tenir compte de l'heterogeneite non observee, les resultats montrent (i) un impact economiquement et statistiquement significatif de la formation sur le salaire dans l'emploi courant, (ii) un impact substantiel sur le salaire de la formation acquise avec les employeurs precedents, (iii) une reduction d'environ 18% du salaire de depart pour les travailleurs en formation, et (iv) par un modele de duree qui tient compte des episodes multiples d'emploi (permettant alors l'utilisation de methodes de type effets fixes ), un degre substantiel de specificite du capital humain acquis par le biais de programmes de formation dispenses par l'employeur. La conclusion a tirer de ces resultats est que le capital humain acquis contient a la fois une composante generale remuneree egalement par tous les employeurs ainsi qu'une composante specifique qui reduit la mobilite tout en n'etant pas remuneree.