Testing Some Predictions of Human Capital Theory: New Training Evidence from Britain

Publication type

Conference Paper

Series

University of Melbourne, Economics Department Seminar

Authors

Publication date

June 21, 2002

Abstract:

We use important new training data from Waves 8-10 of the British Household Panel Survey to explore the degree to which the data are consistent with the predictions of human capital theory. Our data show that most work-related training is viewed by its recipients as general, that the longest training courses are for induction purposes, that the vast majority of training takes place either at the workplace or at the employer's training centre, and that most training is paid for by employers. We also estimate the impact of training - controlling for its financing method - on wages. We find that employer-financed training increases wages both in the current and future firms, with some evidence that the impact in future firms is larger, especially for accredited training. These results are inconsistent with orthodox human capital theory with no credit constraints, but consistent with the relatively recent training literature on training in imperfectly competitive labour markets. They are also consistent with the hypothesis that firms offer credit-constrained workers binding training contracts whereby firms pay for general training and workers repay this 'loan' by receiving a post-training wage below their marginal product.


Related Publications

#517616

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest