Why do firms train?

: evidence on the role of market power in the firm’s decision to train

Abstract

This thesis provides a comprehensive assessment of the relationship between labor market power and firms’ decision to engage in job-training. We use rich matched employer-employee data for Brazil and link it to detailed records on training activity from the main provider. To guide our analysis, we start by proposing an extension of a search model to an economy with training, with heterogeneous productivity levels. Our model predicts that larger firms are more likely to train their workers. Constructing a measure of market concentration for all Brazilian labor markets, we find that training is more prevalent in more concentrated markets and that labor market share is an important predictor of training take-up rates at the firm level. Using an instrumental variable approach, we show that training leads to positive average wage gains for workers, but that these gains are smaller for workers employed in high market power firms.Our results shed new light on the role of labor market power in training provision and its impact for workers, with important policy implications for the design of effective labor market programs.

Date of Award	29 Jun 2022
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Joana Santos Silva (Supervisor)