Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171069
Authors: 
Angelopoulos, Konstantinos
Benecchi, Andrea
Malley, Jim
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6605
Abstract: 
A well-established stylised fact is that employer provided job-related training raises productivity and wages. Using UK data, we further find that job-related training is positively related to subsidies aimed at reducing training costs for employers. We also find that there is a positive, albeit quantitatively small, relationship between wage inequality and training inequality in the UK. Motivated by the above, we explore whether policies to subsidise firms’ monetary cost of training can improve earnings for the lower skilled and reduce inequality. We achieve this by developing a dynamic general equilibrium model, featuring skilled and unskilled labour, capital-skill complementarity in production and an endogenous training allocation. Our results suggest that training subsidies for the unskilled have a significant impact on the labour income of unskilled workers. These subsides also increase earnings for skilled workers and raise aggregate income with implied lifetime multipliers exceeding unity. Finally, the positive spill over effects to skilled workers imply that training subsidies are not very effective in reducing inequality, measured as the distance between skilled and unskilled wages and incomes.
Subjects: 
job-related training
wage and earning inequality
training subsidies
JEL: 
E24
J24
J31
Document Type: 
Working Paper

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