Abstract
AbstractThe literature on the returns to training has pointed out that, immediately following a training episode, wages of participants in employer‐sponsored training increase substantially while wages of participants in government‐sponsored training hardly change. We argue that there is a potential selection issue—most of the government‐sponsored trainees are occupation switchers while most participants in employer‐sponsored training are occupation stayers. An occupational switch involves a substantial destruction of human capital, and once we account for the associated decline in wages, we find a large positive impact of both employer‐ and government‐sponsored training on workers’ human capital.
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