Learning-By-Doing Vs. On-the-Job Training: Using Variation Induced by the EITC to Distinguish Between Models of Skill Formation / James Heckman, Lance Lochner, Ricardo Cossa.

Format:

Book

Author/Creator:

Heckman, James.

Contributor:

National Bureau of Economic Research.

Lochner, Lance.

Cossa, Ricardo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9083.

NBER working paper series no. w9083

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Learning-By-Doing Vs. On-the-Job Training

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

This paper investigates the impact of wage subsidies on skill formulation. We analyze two prototypical models of skill formation: (a) a learning-by-doing model and (b) an on-the-job training model. We develop conditions on the pricing of jobs under which the two models are equivalent. In general they are different and have different implications of wage subsidies on skill formation. On-the-job training models predict that wage subsidies reduce skill formation. Learning-by-doing models predict the opposite. The provisional evidence favors the learning-by-doing model. We apply our estimates to investigate the impact of the EITC on skill formation. We estimate that the EITC reduced the long term wages of participants with low levels of education.

Notes:

Print version record

July 2002.