Training, wages and employment security: an empirical analysis on European data

Abstract

Data from the European Community Household Panel (ECHP) are used to assess the effects of employee training on the average wage and employment security of different labour market groups in EU countries. Significant training wage premia are found only in the case of young or highly educated employees. By contrast training appears to have a strong impact on employment security, measured through subjective measures, in the case of both older and low-educated workers. To reconcile this apparent contradiction, one needs to take into account that, as standard in the literature, wage premia are estimated on a truncated sample including only employed workers. Due to downward wage rigidity, those workers who are unable to maintain their productivity are more frequently laid-off – rather than experiencing a wage fall and be retained in employment – and thereby excluded from the sample.