On-the-job training in Europe: Determinants and wage returns

Using data from the European Community Household Panel on six countries over the period 1995-2001, this article investigates the determinants of workers' participation in training activities and the effects of training on wages. Based on measures of four distinct training types, the authors find that while OLS estimates yield significant wage returns to training for nearly all of the countries, fixed-effects estimations show returns to be not statistically different from zero. This suggests that wage returns to training might be overstated due to failure to take adequate account of the correlation of training with confounding factors that affect wages.