Highly Qualified Employees to Benefit More from Further Training

Highly qualified employees receive higher wage mark-ups after having completed further training than employees with lower qualifications.

Up to now, it has been well-known that taking part in a further training programme can increase an employee’s wage by an average of up to 15 per cent in Germany. Employees with a university degree or a degree from a university of applied sciences receive a higher wage mark-up than for example employees that have completed the Realschule (intermediate secondary education) or the Hauptschule (lower secondary education). These are the findings of a survey conducted by the Centre for European Economic Research (ZEW) in Mannheim, based on the representative data “Professional Qualification and Gainful Employment” of the Institute for Employment Research (IAB) and the Federal Institute for Vocational Education and Training (BIBB). The dataset contains individual information on biography, employment contract, and further training of more than 34,000 employees in 1998/99. The fact that employees with low qualifications only receive low wage mark-ups after having taken part in a further training programme can be a reason for the group’s minor motivation to upgrade their education, and therefore their chances on the employment market are restricted.

Apart from the level of qualification, a number of other factors have an impact on wage mark-ups after a further training programme. For example, wage mark-ups are higher for participants of further training programmes with an advanced professional experience but lower for those that have been working in a company for a long time. Furthermore, the companies’ profile plays a role as companies in a stable economic situation and those offering profit sharing grant their employees significantly higher wage mark-ups after a further training programme.

Moreover, the study conducted by ZEW also examines various impacts of external and internal further training programmes on wages. External further training (such as taking part in courses and seminars, visiting trade fairs and technical lectures as well as consulting specific literature) lead to a high increase in wages for the participants. On the other hand, internal further training (such as on-the-job training, quality circles, and the adoption of special tasks in order to upgrade one’s education) has no measureable impacts on wages. The reason for the difference may be explained by the fact that internal further training primarily transfers company-specific knowledge, which can hardly be transferred to other companies. As a result, internal further training does not improve the participant’s chances on the labour market and the employer is not forced to pay higher wages in order to attach an employee to the company. By contrast, external further training increases the participant’s market value.

Contact

Anja Schüler, E-mail: kuckulenz@zew.de

Prof. Dr. Thomas Zwick, Phone: +49 (0)621/1235-131, E-mail: zwick@zew.de