The Labour Market Returns to Industry Training

The Labour Market Returns to Industry Training (pd…
01 May 2012

This paper investigates the earnings benefits obtained by adults aged 20–64 who participated in industry training between January 2003 and December 2008.

A growing number of adults have been gaining new qualifications through industry training. Between 2003 and 2008, the number of people participating in training increased from 123,800 to 188,700, and the number who gained a qualification in 2003 and 2008 increased from 12,300 to 29,600. In 2008, twothirds of new qualifications at levels 1–4 gained by men and one-fifth gained by women were gained through industry training rather than through tertiary education institutions.

This study focuses on those who began and completed a spell of training during 2003–2008, and were employed for at least 6 months during the year before training and for at least 6 months during the year after their training. About 40 percent of trainees in this study population completed a qualification (mostly at levels 2–4 on the New Zealand Qualifications Framework), and a further 10 percent completed a limited credit programme (mostly at levels 2–3).

The research uses longitudinal administrative data from the Employment Outcomes of Tertiary Education (EOTE) data set, which contains detailed information on participation, qualification attainment, and monthly earnings.

To estimate the impact of gaining a qualification, the changes in average monthly earnings experienced by the trainees over the 1-year pre-training to the 1-year post-training period are compared with the changes experienced by a matched comparison group of working adults who did not participate in industry training over the same period. For those who had completed training by the end of 2005, the change in earnings that was apparent by the third year after the trainees completed their qualifications is also analysed.

This study updates and extends a study completed in 2009, which examined the returns to qualifications gained through industry training during 2002–2005. There are methodological differences between the two studies. The main one is that this study primarily focuses on the impacts of training 1 year after completing training rather than approximately 3 years afterwards. This change means that returns to qualifications gained up to the end of 2008 can be examined. For those who gained qualifications during 2003–2005, the impacts 3 years post-training are directly comparable to results on the returns to level 1– 6 qualifications gained through tertiary institutions over the same period,which are reported in Crichton and Dixon, 2010.

Key Results

Gained a qualification at level 1

  • On average, trainees who completed a level 1 qualification did not experience an improvement in earnings, relative to those of the comparison group, over the 1 year pre-training to 1 year post-training period.

Gained a qualification at level 2 and above

  •  Gaining a qualification at level 2 or above was associated with higher earnings growth for both men and women in all age groups.
  •  Gains generally increased as the level of the qualification increased. Those who gained a level 2 qualification experienced a 3 percent increase in earnings growth on average, level 3 a 5 percent increase, level 4 a 7 percent increase, and level 5 or above a 5 percent increase.1
  •  Women and men who gained a level 3 or 4 qualification experienced similar benefits, while women who gained a qualification at level 2 or level 5 and above experienced greater benefits than men.
  •  In some cases, younger age groups benefited more than older age groups, particularly those who gained level 4 qualifications.
  •  Trainees who gained a qualification in particular fields of study experienced substantial improvements in earnings on average, while those in others fields experienced no or only small benefits.

Completed a limited credit programme

  •  Completing a limited credit programme was associated with a 2 percent increase in earnings growth for both men and women on average.

Did not gain a qualification or complete a limited credit programme

  •  Trainees who did not gain a qualification or complete a limited credit programme did not experience an increase in earnings growth relative to the comparison group on average. This was the case for all programme levels and for both men and women on average.
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