NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

NBER Working Paper No. 9083
Issued in July 2002
NBER Program(s):   LS   PE

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.

download in pdf format
   (924 K)

email paper

This paper is available as PDF (924 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9083

Published: Phelps. E. (ed.) Designing Inclusion: Tools to Raise Low-end Pay and Employment in Private Enterprise. Cambridge: Cambridge University Press, 2003.

Users who downloaded this paper also downloaded these:
Heckman, Lochner, and Taber w6462 Tax Policy and Human Capital Formation
Neumark and Wascher w7599 Using the EITC to Help Poor Families: New Evidence and a Comparision with the Minimum Wage
Cunha and Heckman w12840 The Technology of Skill Formation
Eissa and Hoynes Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply
Heckman and Smith w9818 The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us