The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data

Abstract

Human capital theory suggests that workers may finance on-the-job training by accepting lower wages during the training period. Minimum wage laws could reduce job training, then, to the extent they prevent low-wage workers from offering sufficient wage cuts to finance training. Empirical findings on the relationship between minimum wages and job training have failed to reach a consensus. Previous research has relied primarily on survey data from individual workers that typically lack both detailed measures of job training and important information about the characteristics of firms. This study addresses the issue of minimum wages and on-the-job training with a unique employer survey. We find no evidence indicating that minimum wages reduce the average hours of training of trained employees and little to suggest that minimum wages reduce the percentage of workers receiving training.