Why Do Low-Educated Workers Invest Less in Further Training

2010 – Current academic and policy debates stress the importance of a well-trained workforce where developed economies aim to achieve a competitive and cohesive knowledge society, where “lifelong learning” activities play a central role and whereas an aging population calls for the prevention of skill depreciation. The fact that low-educated workers participate less often in further training is well documented in the economic literature where firms often pay for their workers specific and / or general training with no significant difference between the organisational willingness to train low and high educated workers. This paper focuses on explaining the difference in training participation between the high and low educated from the workers perspective and contributes to the literature by investigating  two alternative explanations. First: low educated workers invest less in further training because of lower economic returns to such investments. Second: the lower willingness of less educated to participate in training is explained due to different preferences or personality traits. Only a few studies investigate the heterogeneity in returns to training across different educated types of workers. This research provide estimates of the returns to training by education level. A worker’s motivation to participate in training is usually unobserved and therefore left as a black box. The applied data enabled the researchers to open this box and focus on specific economic preferences, such as future orientation, preference for leisure and personality traits: the individual’s locus of control, exam anxiety, and the Big Five personality traits.

Results

The researchers found that trained low-educated workers earn 2.6% more than those who don’t. The economic returns are similar to the returns that high educated workers derive from participating in training, suggesting that differences in economic returns cannot explain the differences in participation between low- and high-educated workers (also robust in alternative specifications). Low-educated workers are significantly less willing to participate in such training than high-educated workers due to differences in economic preferences, future orientation and preference for leisure time, as well as personality traits, economic locus of control, exam anxiety, and openness to experience. In particular, the negative effect of exam anxiety on the willingness of low-educated workers to participate in training appears to be great, which may be due to prior negative experiences in school. The fact that the inclusion of the set of economic preferences and personality traits explains differences in investments in further training between low-educated and higher-educated workers deserves further discussion. This can result from the fact that these preferences and personality traits also determined previous educational choices (empirical evidence is not fully conclusive). In the literature, the difference in training participation between high educated and low-educated workers has been attributed to the complementarity between initial education and training on the job. This report suggest that this can be attributed to the fact that the participation in initial education and training is determined by similar economic preferences and personality traits. Since “learning by doing” is an important way of acquiring knowledge, one could also argue that the reason why low-educated workers participate less often in training than high-educated workers is that they learn more often from informal channels. However, a survey question included in the ROA Lifelong Learning Survey asking for “the percentage of working time spent on activities from which one can learn” suggests that low-educated workers spend significantly less time on such activities than high-educated workers (resp. 22% and 32% of their working time). This suggests that the lower training participation of low-educated workers is not due to the substitution of formal training by informal learning.

This report suggest that it’s difficult to increase participation of low-educated workers in lifelong learning activities. However, to the extent that some of these traits develop in the course of one’s life, it might be possible to stimulate the training participation of low educated workers. In particular, this report suggest that helping low-educated workers overcome their fear of taking exams can increase their participation in further training. Also, increasing the awareness of positive economic returns to training for the low educated could help increase their participation in training. This may be especially important when low-educated workers have low expectations about the benefits of being trained.

Reference:  Fouarge, D., Grip,  A. de, Schils, T. (2010) Why Do Low-Educated Workers Invest Less in Further Training.  Bonn: The Institute for the Study of Labor (IZA), Bonn. (The full article is adjusted in PDF).

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