Training Funds and the Incidence of Training: The Case of Mauritius

36 Pages Posted: 24 Jan 2015

See all articles by Oluyemisi Kuku-Shittu

Oluyemisi Kuku-Shittu

A member of the CGIAR Consortium - International Food Policy Research Institute (IFPRI)

Peter F. Orazem

Iowa State University and IZA; IZA Institute of Labor Economics

Sawkut Rojid

World Bank

Milan Vodopivec

World Bank - Human Development Network; IZA Institute of Labor Economics

Abstract

Training funds are used to incentivize training in developing countries, but the funds are based on payroll taxes that lower the return to training. In the absence of training funds, larger, high-wage and more capital intensive firms are the most likely to offer training unless they are liquidity constrained. If firms are not liquidity constrained, the fund could lower training investments. Using an administrative dataset on the Mauritius training fund, we find that the firms most likely to train pay more in taxes than they gain in subsidies. The smallest firms receive more benefits than they pay in taxes.

Keywords: training, general skills, firm-specific skills, training fund, externality, cross-subsidy, tax

JEL Classification: M53, O15, O2, O55

Suggested Citation

Kuku-Shittu, Oluyemisi and Orazem, Peter Francis and Rojid, Sawkut and Vodopivec, Milan, Training Funds and the Incidence of Training: The Case of Mauritius. IZA Discussion Paper No. 8775, Available at SSRN: https://ssrn.com/abstract=2554923

Oluyemisi Kuku-Shittu (Contact Author)

A member of the CGIAR Consortium - International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Peter Francis Orazem

Iowa State University and IZA ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-8656/515-294-7740 (Phone)
515-294-0221 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sawkut Rojid

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Milan Vodopivec

World Bank - Human Development Network ( email )

1818 H Street, NW
Washington, DC 20433
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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