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AbstractWe link the dearth of empirical support for the theory of compensating wage differentials (CWD) to minimum wages and other labour market regulations. As these labour market regulations matter less for informal jobs, we hypothesise that CWD for adverse working conditions are more likely to be observed in these jobs relative to formal jobs. This is tested based on teenage employment data. The results are in line with our hypothesis. While informal jobs pay, on average, lower wages than formal jobs, a substantially higher premium for physically demanding and hazardous working conditions is found in informal jobs. This finding is robust against several sensitivity checks with respect to the identification method and measurement of the independent variables. Our results are also consistent with minimum wages being the key underlying mechanism for this difference in wage setting between formal and informal teenage jobs.

We analyse whether formal education and on‐the‐job skill acquisition are substitutes or complements for a sample of Flemish school‐leavers. Skill acquisition is measured directly through subjective assessments. We find that higher educated workers are more likely to acquire additional skills. While this is primarily explained by between‐occupation effects, also within‐occupation effects are revealed. Undereducated workers have lower overall skill acquisition probabilities than adequately educated workers in similar occupations; overeducated workers with a vocational degree acquire fewer transferable or general skills than their adequately educated colleagues. Overeducated workers also acquire fewer additional skills than adequately educated workers with similar educational backgrounds.

The article analyses participation in five types of training (formal on-site, formal off-site, informal co-worker training, learning by watching and learning by doing) and self-assessed skill acquisition in young Flemish workers' first job. A skill production function is estimated whereby the simultaneity of participation in the different types of training and skill acquisition is taken into account. The results clearly demonstrate the importance of informal training. Formal training participation is found to be only a fraction of total training participation. Moreover, the determinants of total training participation and skill acquisition differ from those of formal training participation. While some training types are complementary, others are clearly substitutes. Finally, most types of training generate additional skills. Nonetheless, learning by doing is found to be complementary to formal education in the production of both specific and general skills, whereas formal training serves as a substitute.

Five overeducation measures are evaluated empirically on the basis of encompassing tests. The measures are based on job analysis (JA), worker-assessment of the required level to do the job (WAd), worker-assessment of the required level to get the job (WAg), the mean educational level of realized matches (RMmn), and the modal level of realized matches (RMml). Over- and undereducation are linked to wages, job satisfaction, mobility and training participation. For none of the outcome variables, the JA model is encompassed by another model. Given the risk on systematic errors, this is a sufficient condition to prefer a carefully conducted JA to any other measure. The most reliable solution is to use the JA measure as an instrument for the WAd measure.