The Returns to Continuous Training in Germany: New Evidence from Propensity Score Matching Estimators

The present paper examines the wage effects of continuous training programs usingindividual-level data from the German Socio Economic Panel (GSOEP). In order to accountfor selectivity in training participation we estimate average treatment effects (ATE and ATT)of general and firm-specific continuous training programs using several state-of-the-artpropensity score matching (PSM) estimators. Additionally, we also apply a combinedmatching difference-in-differences (MDiD) estimator to account for unobserved individualcharacteristics (e.g. motivation, ability). While the estimated ATE and ATT for generaltraining are significant ranging between about 4 and 7.5 %, the corresponding wage effects offirm-specific training are mostly insignificant. Using the more appropriate MDiD estimator,however, we find a more precise and highly significant wage effect of about 5 to 6 %, thoughonly for general training and not for firm-specific training. These results are consistent withstandard human capital theory insofar as general training is associated with larger wageincreases than firm-specific training. Furthermore, we conclude that firms may intend to usespecific training to adjust to new job requirements, while career-relevant changes may beconditioned to general training.