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Credit constraints and investment in human capital: training evidence from transition economies

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  • Popov, Alexander

Abstract

Using a unique survey database of 8265 firms from 25 transition economies, I find that lack of access to finance in general, and to bank credit in particular, is associated with significantly lower investment in on-the-job training. This effect is stronger in education-intensive industries and in industries facing good global growth opportunities. To address endogeneity issues, I use the structure of local credit markets as an instrument for credit constraints at the firm-level. In addition, in panel estimates, I control for the presence of unobserved firm-level heterogeneity, as well as for changes in macroeconomic conditions. JEL Classification: G10, J21, J24, M53

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Paper provided by European Central Bank in its series Working Paper Series with number 1606.

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Date of creation: Nov 2013
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Handle: RePEc:ecb:ecbwps:20131606

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Keywords: credit constraints; human capital; on-the-job training;

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Cited by:
  1. Floreani, Vincent Arthur, 2014. "Fixing Europe's youth unemployment and skills mismatch, can public financial support to SMEs be effective? The case of the European Commission and European Investment Bank joint initiatives," MPRA Paper 55849, University Library of Munich, Germany.

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