Evaluating the effect of tax deductions on training

Dutch employers can claim an extra tax deduction when they train employees older than age 40. This discontinuity in a firm’s training cost is exploited to identify the tax deduction's effects on training participation and of training participation on wages. The results show that the training ra...

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Bibliographic Details
Published in:Journal of labor economics 2004-04, Vol.22 (2), p.461-488
Main Authors: Leuven, Edwin, Oosterbeek, Hessel
Format: Article
Language:English
Subjects:
Age
Betriebliche Weiterbildung
Business community
Control groups
Costs
Direct costs
Economics
Employees
Estimated taxes
Expenditures
Externality
Human capital
Industrial relations
Inservice training
Itemized deductions
Körperschaftssteuer
Labour economics
Niederlande
Older workers
On-the-job training
Participation
Personnel management
Steuer
Steuerermäßigung
Studies
Tax deductions
Tax exemptions
Tax law
Training
Vocational training
Wages
Wages & salaries
Älterer Arbeitnehmer
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Summary:Dutch employers can claim an extra tax deduction when they train employees older than age 40. This discontinuity in a firm’s training cost is exploited to identify the tax deduction's effects on training participation and of training participation on wages. The results show that the training rate of workers just above age 40 is 15%–20% higher than that of workers just below age 40. This difference mainly results from the postponement of training and is not a stimulating effect of the measure. The two‐stage least squares estimate of the wage effect of training is not statistically different from zero.
ISSN:0734-306X
1537-5307
DOI:10.1086/381257