The puzzle of non-participation in continuing training : an empirical study of chronic vs. temporary non-participation

"Although participation in continuing vocational training is often found to be associated with considerable individual benefits, a puzzlingly large number of people still do not take part in training. In order to solve the puzzle we distinguish between temporary and chronic non-participants. Previous studies have shown that training participants and non-participants differ in unobservable characteristics and therefore self-select into training or not. We show that even non-participants cannot be treated as a homogeneous group: there are those who never take part in training (chronic non-participants) and those who are not currently taking part (temporary (non-)participants). Using a unique data set of non-participants commissioned by the German 'Expert Commission on Financing Lifelong Learning' and covering a very large number of individuals not taking part in training, we separate and compare chronic and temporary non-participants. By estimating a sample selection model using maximum likelihood estimation we take potential selection effects into account: temporary (non-)participants may be more motivated or may have different inherent skills than chronic nonparticipants. We find that chronic non-participants would have higher costs than temporary (non-)participants and their short-term benefits associated with their current jobs would be lower. However, in the long run even chronic non-participants would benefit similarly from participation due to improved prospects on the labor market. The results indicate that chronic non-participants either misperceive future developments or suffer from an exceptionally high discount rate, which in turn leads in their view to a negative cost-benefit ratio for training." (Author's abstract, IAB-Doku) ((en)) Additional Information Kurzfassung (deutsch) Executive summary (English)Weiterbildung, Teilnehmer, Bildungsbeteiligung, Bildungsinvestitionen, Bildungsertrag, Kosten-Nutzen-Analyse, Bildungsökonomie

The puzzle of non-participation in continuing training: an empirical study of chronic vs. temporary non-participation

Although participation in continuing vocational training is often found to be associated with considerable individual benefits, a puzzlingly large number of people still do not take part in training. In order to solve the puzzle we distinguish between temporary and chronic non-participants. Previous studies have shown that training participants and non-participants differ in unobservable characteristics and therefore self-select into training or not. We show that even non-participants cannot be treated as a homogeneous group: there are those who never take part in training (chronic non-participants) and those who are not currently taking part (temporary (non-)participants). Using a unique data set of non-participants commissioned by the German 'Expert Commission on Financing Lifelong Learning' and covering a very large number of individuals not taking part in training, we separate and compare chronic and temporary non-participants. By estimating a sample selection model using maximum likelihood estimation we take potential selection effects into account: temporary (non-)participants may be more motivated or may have different inherent skills than chronic nonparticipants. We find that chronic non-participants would have higher costs than temporary (non-)participants and their short-term benefits associated with their current jobs would be lower. However, in the long run even chronic non-participants would benefit similarly from participation due to improved prospects on the labor market. The results indicate that chronic non-participants either misperceive future developments or suffer from an exceptionally high discount rate, which in turn leads in their view to a negative cost-benefit ratio for training

Reverse Educational Spillovers at the Firm Level / 2011 + 2016

Purpose The purpose of this paper is to examine spillover effects across differently educated workers. For the first time, the authors consider “reverse” spillover effects, i.e. spillover effects from secondary-educated workers with dual vocational education and training (VET) to tertiary-educated workers with academic education. The authors argue that, due to structural differences in training methodology and content, secondary-educated workers with VET degrees have knowledge that tertiary academically educated workers do not have. Design/methodology/approach The authors use data from a large employer-employee data set: the Swiss Earnings Structure Survey. The authors estimate ordinary least squares and fixed effects panel-data models to identify such “reverse” spillover effects. Moreover, the authors consider the endogenous workforce composition. Findings The authors find that tertiary-educated workers have higher productivity when working together with secondary-educated workers with VET degrees. The instrumental variable estimations support this finding. The functional form of the reverse spillover effect is inverted-U-shaped. This means that at first the reverse spillover effect from an additional secondary-educated worker is positive but diminishing. Research limitations/implications The results imply that firms need to combine different types of workers because their different kinds of knowledge produce spillover effects and thereby lead to overall higher productivity

Social Attitudes on Gender Equality and Firms' Discriminatory Pay-Setting

We analyze the relationship between social attitudes on gender equality and firms' pay-setting behavior by combining information about regional votes relative to gender equality laws with a large data set of multi-branch firms and workers. The results show that multi-branch firms pay more discriminatory wages in branches located in regions with a higher social acceptance of gender inequality than in branches located in regions with a lower acceptance. The results are similar for different subsamples of workers, and we cannot find evidence that regional differences in social attitudes influence how firms assign women and men to jobs and occupations. The investigation of a subsample of performance pay workers for whom we are able to observe their time-based and performance pay component separately shows that social attitudes on gender equality only influence the time-based pay component but not the performance pay component of the same workers. Because regional-specific productivity differences should influence the workers' performance pay and time-based pay, unobserved gender-specific productivity differences are not likely to explain the regional variation in within firm gender pay gaps. The results support theories and previous evidence showing that social attitudes influence gender pay gaps in the long run

Differences in the educational paths of entrepreneurs and employees

This paper examines whether individuals who become either entrepreneurs or employees follow systematically different educational paths to a given educational level. Following Lazear\u27s jack-of-all-trades theory, we expect that entrepreneurs aim at a balanced set of different skills - that is, they combine academic and vocational skills - while employees specialize in one skill. This means that entrepreneurs follow educational paths that combine different types of education, while employees follow same-type paths while climbing up the educational ladder. We use the Swiss Labor Force Survey to test our hypothesis. Our empirical findings are in line with Lazear\u27s theory and indicate that individuals who change between different types of education and acquire a more balanced set of skills are more likely to become entrepreneurs. Thus, the permeability of a country-specific educational system is one crucial determinant of entrepreneurship. (DIPF/Orig.

Beyond traditional cost-benefit analyses of vocational education and training : workers' and firms' perspectives

Human capital is the key competitive factor in the developed world. Similar to other types of investments, the decision to invest in human capital is the result of comparing costs and benefits. The traditional cost-benefit analyses, however, do not explain several widespread phenomena, such as a puzzling large number of workers departing from their initially chosen educational paths or even refraining from training at all as well as the existence of firms that provide training although for them this investment does not (directly) pay. Going beyond traditional cost-benefit analyses of vocational education and further training our findings demonstrate that the mentioned puzzles can be solved by the innovations we provide: first of all, we show that it is important to take into account that each educational or further training step is part of a complete educational and training strategy and should, thus, not be analyzed in isolation. Indeed, we find that combinations of different types of human capital varying in their degree of work and labor market relations are at least as competitive as straight educational paths. Second, although wage increases for workers and productivity increases for firms are certainly important benefits, it is a serious shortcoming for the analysis of training decisions if other types of benefits are neglected. In particular, long-term benefits in terms of better prospects on the labor market for workers and indirect benefits in terms of increased overall recruitment success for firms turn out to be decisive. Third, concentrating on monetary costs only is a serious shortcoming as well. In addition to monetary cost components there are also substantial non-monetary costs, especially in terms of time, attached to training participation, and these costs are at least as decisive. Notably, time restrictions seem to be an even more serious hurdle for training participation than liquidity constraints. Fourth, although cost and benefit measures are most important for training decisions, there are other factors that have been widely neglected so far, i.e., risk preferences, information asymmetries and time preferences. We show that these should also be considered as crucial factors in educational and training decisions. Humankapital gilt heute in der industrialisierten Welt als der zentrale Wettbewerbsfaktor. Die Entscheidung, in Humankapital zu investieren, ist - wie die Entscheidung, andere Arten von Investitionen zu tätigen - das Ergebnis eines Kosten-Nutzen-Vergleichs. Allerdings können traditionelle Kosten-Nutzen-Analysen zahlreiche weit verbreitete Phänomene nicht erklären. So beobachten wir eine bedeutende Anzahl an Arbeitnehmern, die von ihrem ursprünglich eingeschlagenen Ausbildungspfad abweichen, Personen, die ganz generell Bildungsmassnahmen fernbleiben, und Firmen, die Bildungsmassnahmen anbieten, obwohl sich diese für sie nicht (direkt) auszuzahlen scheinen. In der vorliegenden Arbeit schlagen wir deshalb innovative Erweiterungen des traditionellen Kosten-Nutzen-Modells vor, die mit den genannten Beobachtungen vereinbar sind: Erstens muss berücksichtigt werden, dass jeder Aus- und Weiterbildungsschritt Teil einer kompletten Bildungsstrategie ist und deshalb nicht isoliert betrachtet werden darf. Tatsächlich finden wir, dass Bildungspfade, welche verschiedene, sich hinsichtlich Berufs- und Arbeitsmarktbezug unterscheidende Bildungstypen umfassen, mindestens genauso wettbewerbsfähig sind wie geradlinige Bildungspfade. Zweitens zeigen wir, dass eine Gehaltserhöhung für Arbeitnehmer und ein Produktivitätszuwachs für Firmen zwar wichtige Nutzenkomponenten darstellen, dass aber eine Analyse, die andere Ertragsarten vernachlässigt, deutlich zu kurz greift. Insbesondere scheinen für Arbeitnehmer langfristige Erträge aufgrund verbesserter Arbeitsmarktchancen und für Unternehmen ein indirekter Nutzen in Form eines erhöhten Rekrutierungserfolgs zentral. Drittens weisen wir darauf hin, dass auch eine ausschliessliche Berücksichtigung monetärer Kosten unzulänglich ist. So ist eine Investition in Bildung ebenfalls mit nicht- monetären Kosten verbunden, wobei speziell die für den Besuch der Bildungsmassnahme aufgebrachte Zeit gemeint ist. Bemerkenswert ist denn auch der Befund, dass Zeitrestriktionen eine bedeutend höhere Hürde für (Weiter-)Bildungsmassnahmen darstellen als Liquiditätsbeschränkungen. Viertens belegen wir, dass neben den genannten Kosten- und Nutzenaspekten weitere Faktoren wie Risikopräferenzen, Informationsasymmetrien und Zeitpräferenzen entscheidende Determinanten für Aus- und Weiterbildungsentscheidungen sind

Educational diversity and individual pay: The advantages of combining academic and VET graduates in the workplace

This study analyzes how worker pay is related to educational diversity, i.e., diversity in the educational composition of work groups in terms of the different types of vocational and academic education. As previous research shows that various types of diversity have positive effects in the workplace, a positive effect due to ‘educational diversity’ also seems plausible. We provide novel empirical evidence on the relation between the educational diversity of work groups and productivity, or more precisely, individual workers’ pay. Using theoretical considerations drawn from diversity research, we develop hypotheses on the relation between a group’s educational diversity and individual workers’ pay. Drawing on an exceptionally large set of employer-employee data with more than 87,000 employers and 1,200,000 employees, we test our hypotheses and find that the educational diversity of work groups—and thus work groups with workers of different types of vocational and academic education—is positively related to individual workers’ pay. Thus, educational diversity in the form of a combination of academic and Vocational Education and Training (VET) graduates in the workplace seems to be advantageous for the workers involved. Our findings suggest that educational diversity is especially beneficial in groups with high levels of task complexity and shorter organizational tenure