Determinants of Employer-sponsored Training Participation for Young Workers during Economic Downturns: Evidence from the Past

Abstract

This study is devoted to learning from the past and understanding the determinants of training participation for young workers during recessionary periods. Evidence is found that the post-training wage growth expected over a few years after training, rather than an immediate wage gain upon completion of training, was a significant motive for young individuals to invest in training in the midst of the post-Black Monday recession. An immediate wage gain due to training, in contrast, provides no statistically significant evidence. These results indicate that young workers’ decision to invest in skill acquisition was made reasonably based on a stretched span of wage profile even during the period of economic slowdown rather than based on a myopic view as is often believed to be typical behaviour of young individuals. An important implication of this study is that the human capital of young workers continues to accumulate even in recessionary periods if an employer plans workers’ career development and earnings growth potentials beyond the time of economic hardship.