Kuku, Oluyemisi Orazem, Peter F. Rojid, Sawkut Vodopivec, Milan
Year of Publication:
IZA Discussion Papers 8775
Training funds are used to incentivize training in developing countries, but the funds are based on payroll taxes that lower the return to training. In the absence of training funds, larger, high-wage and more capital intensive firms are the most likely to offer training unless they are liquidity constrained. If firms are not liquidity constrained, the fund could lower training investments. Using an administrative dataset on the Mauritius training fund, we find that the firms most likely to train pay more in taxes than they gain in subsidies. The smallest firms receive more benefits than they pay in taxes.
training general skills firm-specific skills training fund externality cross-subsidy tax