Schooling and regional factors as determinants of employees' participation in further education
Final Report Abstract
Further training is becoming more and more important to deal with the ongoing technological and demographic change which challenges labor markets in developed countries. The training sector is already one of the largest education sector in Germany in terms of participants (training suppliers and training participants) and it is very diverse. Yet, research on regional and educational determinants, and the returns to specific types of further training in Germany is still scarce. Therefore, we used both funding periods in the SPP1646 to shed more light on some of the open questions: How does the regional industrial structure and the regional supply of training influence individual training participation? What returns are there to enrolling in college based on vocational qualifications? NEPS- SC6 and NEPS-SC6-ADIAB provided an exceptional data source for these questions. We investigated the influence of the regional industry structure on individual training participation. We show that in regions with a high number of firms in a sector, where competition for employees is large, training participation is lower. In such a situation, firms have little incentive to finance training because they fear that employees trained by them are hired by a competing firm. This suggest that there may be negative externalities on training participation due to sector agglomeration. These might be counteracted, for example, by using payback clauses. We explore the correlation between the regional supply of training and employees’ training participation. The results indicate that training participation is significantly higher in regions with many suppliers in the training market. The estimated relationship is non-linear. An initial increase in the number of suppliers in areas with a low absolute number of suppliers increases training to a larger extent than in areas with a high number of suppliers. This suggests that the effectiveness of subsidizing training suppliers that is common practice in German public policy could be increased when being concentrated on regions with a low initial supply. Finally we show how individuals who enroll in college without the formal entry requirement, i.e. the Abitur, fare on the labor market in terms of employment probability, job prestige, monthly and cumulative earnings compared to those who continue with a vocational-training-based career. Given policy initiatives to encourage flexibility between vocation-based and higher education, this is an important policy question. The results suggests that there are positive returns in terms of more prestigious jobs and higher monthly earnings. However, enrollees have much lower employment levels during the early phase of their career than those who continue with their vocational-training-based career. At the end of the 30-year observation period, enrollees record higher cumulative earnings than those who continue with their vocational-training-based career. However, the estimates are barely significant and have wide confidence intervals. This indicates that recouping the opportunity costs of enrolling in college is a lengthy and risky process for this group of non-traditional students.
