Although there has been extensive research on the benefits of education, few studies have examined how on-the-job training impacts wages. The research reviewed by the authors indicates that wage improvements occur thanks to on-the-job training, with most studies finding a positive impact on wages. 

Although there has been extensive research on the benefits of education, few studies have examined how on-the-job training impacts wages. The research reviewed by the authors indicates that wage improvements occur thanks to on-the-job training, with most studies finding a positive impact on wages. In Vietnam, a mismatch between middle or high school education and industry needs has led to a shortage of workers with suitable skills. This raises an important question about how on-the-job training can benefit young workers in Vietnam, including non-monetary benefits. As there is a gap in research on this topic in Vietnam, especially for young workers, this study aims to contribute information on the benefits of on-the-job training in the country.

The study analyzes the impacts of on-the-job training offered by domestic private enterprises on workers, including both wage and non-wage factors. To evaluate the effects of education and training on young workers’ wages while controlling for firm-related characteristics and unobservable worker-related factors, we use the instrumental variable regression model with panel data. This method helps control the endogeneity of education and training variables and other confounding factors, providing more precise insights into the impacts of education and training on workers' wages in Vietnam.

While there has been more research on the impacts of on-the-job training on wages, few studies have examined its impact on non-monetary benefits. Therefore, this study makes a novel contribution by providing the first evidence not only on monetary but also non-monetary benefits, such as paid sick leave, social insurance, unemployment, and accident benefits, of on-the-job training for workers.

The study utilizes secondary data from business surveys in Vietnam. The instrumental variable regression analysis with panel data reveals that high-level education does not increase young workers’ wages, but on-the-job training does have a positive impact on their wages. Interestingly, this effect was only identified in the group of young workers and was not found for the entire sample.

The research results demonstrate that on-the-job training offered by domestic private enterprises is more meaningful for wage increases.

Originated from

Thanh Quy Nguyen, Anh Thuy Nguyen, Anh Lan Tran, Hung Thai Le, Ha Hoang Thi Le, Lien Phuong Vu (2021). Do Workers Benefit from On-the-Job Training? New Evidence from Matched Employer-Employee Data. Finance Research Letters, 40.

https://doi.org/10.1016/j.frl.2020.101664

AUTHOR FROM VNU UNIVERSITY OF ECONOMICS AND BUSINESS

Dr. Nguyen Thuy Anh is currently Head of Department of Political Economy, Faculty of Political Economy, VNU University of Economics and Business. She holds a Ph.D. in International Research from Waseda University, Tokyo, Japan. Dr. Thuy Anh’s research interests revolve around political economy, particularly the processes of globalization, regionalization, and the role of the state in a market economy. In addition, her research works also focus on topics related to economic, social, and international policy, the globalization of higher education, inclusive learning environments, green universities, sustainable development, digital economy, digital transformation, and innovation.