The Effect of Firm-Based Training on Earnings. Working Paper.

The conclusion of a 1999 Organisation for Economic Cooperation and Development (OECD) report that wage gains for training are higher for workers with lower levels of education was revisited using data for males from the 1997 Australian Survey of Education and Training (SET). The study used methods similar to the OECD report (ordinary least squares and treatment effects model) with the following findings: (1) earnings effects for workers with Skilled and Basic Vocational Qualifications were slightly higher than for completers of Year 12; (2) years of occupational experience strongly affected earnings, though effect size declines with experience; and (3) structured training had a positive effect and unstructured training mixed effects. No evidence of a pattern of earnings effects consistent with the OECD results was found. A second study conducted further analyses of the 1997 SET data within the context of the OECD results. For Australia, the OECD had used 1995 Australian Workplace and Industrial Relations Survey (AWIRS). SET results were compared with AWIRS and other results for Canada, France, Germany, Italy, the Netherlands, and Great Britain. The reanalysis highlighted limitations of the OECD report: focus on employer-sponsored formal training, incumbent employees aged 25-54, and cross-sectional rather than longitudinal data. With multivariate analyses to correct for selection biases, the second study did not support the conclusion of the OECD report. (Study 1 contains 10 references; study 2 contains 24 references.) (SK)