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Abstract

General education and on-the-job training are major forces determining earnings. This contribution analyses the effects of general education and on-the-job training, relative to each other, on workers' relative earnings and on the probability of making an upwards transition in the earnings distribution. The analysis is done for Denmark, the Netherlands, Italy, and Spain, using the European Community Household Panel (1995–2001). Our results reveal that in all countries on-the-job training and high levels of general education reduce the risk of being in a low-pay situation, whereas they increase the probability of escaping from low-paid jobs to better-paid jobs. However, the relative contributions differ significantly, on-the-job training being relatively more important for upward mobility in Italy and Spain and tertiary education more important for reducing the risk of being in low pay in Denmark and the Netherlands.