TY  - JOUR
AU  - Heckman,James
AU  - Lochner,Lance
AU  - Cossa,Ricardo
TI  - Learning-By-Doing Vs. On-the-Job Training: Using Variation Induced by the EITC to Distinguish Between Models of Skill Formation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9083
PY  - 2002
Y2  - July 2002
UR  - http://www.nber.org/papers/w9083
L1  - http://www.nber.org/papers/w9083.pdf
N1  - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu

Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON  N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca
AB  - 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.
ER  -