Employer-supported training in Australia: participation, demand and supply

Employer-supported training is the outcome of a joint decision between the employer and employee. Following Oosterbeek (1998), we model this decision in a structural framework. In this framework, employers supply training if they believe training will result in a net benefit to the firm. Similarly, employees undertake training if they believe the training will result in a net benefit to them. This joint decision can be specified as a bivariate probit, with the selection equation representing the employee’s demand for training and the outcome equation representing the employer’s supply decision. We estimate this model with data from 2011—12 Survey of Adult Skills (PIAAC) for Australia, which include data on employees’ unmet demand for training. This additional information allows us to identify the supply from the demand.