Do sectoral training funds stimulate training?

Sectoral levelling funds are an arrangement aimed at alleviating a well-known theoretical problem of underinvestment in worker training because of free-rider behaviour of firms. In the Netherlands, collective agreements require firms to participate in such funds in a number of sectors. Using a comprehensive dataset of Dutch firms, we attempt to determine the extent to which these levelling funds have a stimulating effect on the level of training investments of firms. Surprisingly, no indications are found for the existence of such an effect. Training levels are not higher in sectors with a fund than in sectors without a fund. Several explanations are discussed to account for these findings.