Does workplace training mitigate inequalities in earnings?

Transcription

1 Does workplace training mitigate inequalities in earnings? A comparison between Germany and England Rossella Icardi r.icardi@soton.ac.uk University of Southampton 11 th International German Socio-Economic Panel Users Conference Berlin, 1 July 2014

2 Overview THEORETICAL FRAME Aim Previous literature Concepts Context Germany and England Research Questions EMPIRICAL INVESTIGATION Data and Sample Method: Difference-in-Differences Results for Germany Results for England Discussion and conclusions

3 Aim To investigate the role workplace training plays in the reduction of wage differences between individuals with different educational background. To provide further insights to the understanding of the mechanism connecting education, workplace training and labour market outcomes. Why? Educational systems and qualifications may favour the generation and persistence of inequalities instead of reducing them. It is important to determine whether a solution exist to correct for wage differences experienced on the job.

4 Previous research + positive link between education and wages? link between workplace training and wages? link between training participation and wage inequalities In case of a positive effect on wages, workplace training may have the potential to reduce wage inequalities Education Training Wages

5 Concepts Training: Any practice of training workers receive while in employment, and usually provided by the employer workplace training / on-the-job training. Education: distinction between general and vocational schooling, on the quality of education rather than quantity. Wage: wage change after participation in workplace training.

6 Context GERMANY - Stratified Educational system - Early differentiation between vocational and general tracks - Institutionalized Apprenticeship system (Dual system) - High skills regime ENGLAND - Comprehensive Educational system - Non-institutionalized streaming of students by abilities - Poor Apprenticeship system + No unified system of vocational education - Low skills regime

7 Research Questions 1. Does workplace training have an effect on wages? (overall) 2. Are workplace training returns different across type of qualifications (whether individuals possess a general or vocational educational qualification)? 3. Is there any difference in Germany compared to England?

8 Data and Sample SAMPLE: Employed Individuals Age Who achieved a upper secondary qualification as highest level of education DATA: GSOEP and BHPS Education: categorization of CASMIN educational variable into a dummy to identify who obtained a general or a vocational secondary school certificate GERMANY Hauptschule + apprent, Realschule + apprent Vocationally educated VS Gymnasium + apprent Generally educated ENGLAND FE (further education) college (aged 18/19) + A-level certificate Generally educated Training: Binary variable 1 = yes if the employee has attended at least one course in the three years before the interview and 0 = no if not) Wages: % change in hourly wage

9 Method Difference-in-differences to address the issue of training endogeneity

10 Difference-in-Differences

11 Results Descriptive Statistics

12 Naive indicator Germany England Hourly wage Hauptschule Realschule Gymnasium ALL General Vocational ALL Control Treatment Difference SE N

13 Difference-in-Differences Germany England Control Treatment DiD Control Treatment DiD Before = After = Diff SE N

14 D-i-D Germany - GSOEP Model 1 Model 2 Control for personal and employment characteristics Interaction term Log of hourly wage b/se b/se Treatment 0.060*** 0.060*** Period *** *** Treatment*Period 0.046** 0.058* (Hauptschule) Realschule *** *** Gymnasium 0.112*** 0.106*** Treated*Period*Realschule Treated*Period*Gymnasium Observations

15 D-i-D England - BHPS Model 1 Model 2 Control for personal and employment characteristics Interaction term Log of hourly wage b/se b/se Treatment Period Treatment*Period 0.127** 0.082* (general qualification) Vocational qualification 0.134*** 0.093*** Treatment*Period*Vocational Qual *** ** Observations

16 Summary of results GERMANY ENGLAND Positive effect of training on wages Greater share of generally educated individuals among the trainees Possessing a general type of education positively affect wage levels, BUT Training returns do not differ by type of education Positive effect of training on wages Greater share of vocationally educated individuals among the trainees Possessing a general type of education positively affect wage levels, AND Training returns differ by qualification: vocationally educated benefit less than generally educated.

17 Conclusion In Germany training returns do not differ by educational certificate In the England they differ: vocationally educated (higher wage earners) benefit more than generally educated Workplace training participation could be considered a successful tool for the reduction of wage differences across individuals. Differences depend on individuals educational background. In England it contributes to the reduction of wage inequalities on the labour market by reducing the wage gap between vocationally and generally educated individuals.

18 Thank you for your attention