Wages and on-the-job training in Tunisia

Abstract

Training costs may hamper intra-firm human capital accumulation. As a consequence, firms may be tempted to have workers pay for their on-the-job training (OJT). In this paper, we analyse the links of OJT and worker remuneration in the suburb of Tunis, using case study data for eight firms. We find that the duration of former OJT negatively influences starting wages, while there is no anticipated effect of future training on wages at the firm entry. In contrast, current wages are positively affected by former OJT but negatively affected by ongoing OJT. These results provide very rare empirical support in Less Developed Countries (LDCs) for classical human capital theories and cost sharing theories applied to OJT.

Keywords:

• wages
• on-the-job training
• Tunisia

JEL Classification:

• J24
• J31
• O12

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. See Lynch (1992), Barron et al. (1989, 1999) and Loewenstein and Spletzer (1996).

2. Recent evidence on wage returns to training using matched employer–employee data in various developing countries, albeit not Tunisia, is reported in Almeida and Lince de Faria (2014, Table A1).

3. Matched worker–firm data have been collected as part of the World Bank’s Regional Program for Enterprise Development (RPED) surveys in Africa. Each of these surveys constitutes a sample of about 200 firms with about 10 interviewed workers in each firm. However, similar data are not yet available for Tunisia.

4. The methodology of the Tunisian survey appears in Nordman (2002) and Destré and Nordman (2003).

5. When calculated instead from the age at the time of leaving the school, from which 6 years are deducted, the average number of schooling years nearly amounts to 13. Thus, by eliminating unsuccessful years of education, we obtain an education variable net from repeated classes. For comparison, Angrist and Lavy (1997) estimate the number of repeated classes at two to three years in Morocco. UNDP (1994) reports that Tunisia in the 1980s had a higher rate of repeated classes at the primary school than Morocco.

6. The average monthly wage corresponds to 1.8 times the monthly SMIG of 1997 for 48 h per week (177.8 Tunisian dinars, that is, 125 US dollars in 2001). The declared monthly wages are those of January and February 1999.

7. The excluded instruments are pprim, panal, enft, enft², enft*age, prove, mari*female, mari*male, choma, choma², emsim, apprenti, stagan, pprim*age, panal*age, pprim*enft, psecon*enft, psup*enft, panal*enft, pprim*choma, psecon*choma and panal*choma.

8. Interacting OJT with education years produces mixed results (not shown). On the one hand, former OJT crossed by education years is never significant whether in starting or current wages equations. On the other hand, current OJT crossed by education years is not significant in the starting wage equation, while it has a positive significant effect in the current wage equation, indicating that OJT may be more efficient for better educated workers. Yet, in order to preserve on degrees of freedom with our small sample, we choose not to introduce the interacted effects of OJT and education.

9. See Schultz (2004), Kahyarara and Teal (2008) and Kuépié, Nordman, and Roubaud (2009).

10. Their estimated mean education return is 9.5% in 1980 and 5.9% in 1999.

11. Recall that the mean duration for trained worker is 6 months.

Additional information

Funding

This work has been carried out thanks to the support of the A*MIDEX project TMENA (No. ANR-11-IDEX-0001-02) funded by the ‘Investissements d'Avenir’ French Government program, managed by the French National Research Agency (ANR).