The impact of labor market reforms on firm training for nonregular and regular workers

Abstract

AbstractNonstandard employment is typically associated with reduced opportunities for workers to accumulate human capital via job training. One policy response is to require equal access to training for nonstandard employees. In this study, we investigate the impact of a 2007 Korean labor‐market reform that required such access for nonstandard employees. Using a difference‐in‐difference methodology, we find that, overall, the reform reduced the incidence of employer‐provided training for both regular and nonregular workers. At the employer level, the negative effect for regular workers attenuates over time, implying some type of adaptation or evasion by employers that preserves differential rates of training. Although the main effects on training were negative, we find considerable heterogeneity in outcomes. Specifically, the presence of a union is associated with a significantly greater probability of postreform training for nonregular workers, while the presence of performance‐pay systems is associated with a significantly lower probability for nonregular workers and a higher probability for regular workers. Ultimately, these results imply that the success of labor‐market reforms that seek to improve nonstandard job quality depends upon employer and labor‐market characteristics. Such reforms may be most successful in situations where unions can help assure compliance with legislative intent.