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Education boosts individuals’ productivity and wages. A year of extra schooling increases earnings by around 5-10 per cent. Yet many individuals leave school with minimal skills and qualifications. These individuals go on to be disadvantaged in the labour market, in terms of earnings and employment prospects. Furthermore, having a larger proportion of unskilled workers than many other developed countries puts the UK at a disadvantage economically. It has long been argued that the way for these workers to ‘catch up’ is through lifelong learning. Certainly, a significant number of adults are undertaking some form of lifelong learning. However, recent research suggests that the impact of some types of lifelong learning on earnings at least is minimal. This paper focuses on another distinct type of lifelong learning, namely work related training. The literature has suggested a positive impact from training on both individuals’ productivity levels and their wages. We too find that work related training has a large positive impact on earnings, but unlike previous studies, we find this to be true for only certain types of workers. Although on average work related training does give higher wages, this hides the fact that only some workers gain from training. Male workers who undertook work related training in mid career (age 33-42) experienced 4-5 per cent higher wage growth over the period 1991-2000, as compared to similar workers who did not undertake any training. However, workers who are selected to receive training are not representative of all workers. Rather, firms appear to ‘cherry pick’ workers, identifying those most likely to gain from training. When we took account of this, we found that workers who received training gained substantially (12 per cent higher wage growth over the period). However, those workers who did not receive training would not have gained higher wages from the training had they done so. To some extent ‘firms know best’. Whilst formal qualifications taken in adulthood do not generate higher wages for workers, work related training, which is generally provided by or at least organised by firms, does give a clear wage gain. Firms appear able not only to pick those workers most likely to gain from training but also to provide training that has a positive impact on wages. From a policy perspective however, it would appear that work related training in adulthood is not necessarily a substitute for providing British workers with adequate skills during their initial education. Low productivity workers with few skills are unlikely to gain from a policy to encourage employers to provide training. Instead, firms are likely to train those workers who are more able in the first place, thereby leaving the poorly skilled worker even further behind.
Education boosts individuals’ productivity and wages. A year of extra schooling increases earnings by around 5-10 per cent. ... Show Full Abstract
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Authors: Feinstein, Leon; Galindo-Rueda, Fernando; Vignoles, Anna Corporate authors: London School of Economics and Political Science. Centre for Economic Performance (CEP) Date: 2004 Geographic subjects: Europe; Great Britain Resource type: Paper Series name: Discussion paper (London School of Economics and Political Science. Centre for Economic Performance) Subjects: Vocational education and training; Disadvantaged; Labour market; |
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VOCEDplus is produced by the National Centre for Vocational Education Research (NCVER), which together with TAFE South Australia, is a UNESCO regional Centre of Excellence in technical and vocational education and training (TVET). VOCEDplus receives funding from the Australian Government Department of Education, Employment and Workplace Relations (DEEWR).