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The effect of quantitative and qualitative training on labour demand in Belgium: a monopolistic competition approach

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Author Info

  • Benoît Mahy

    (Centre de Recherche Warocqué, Université de Mons-Hainaut, Belgium)

  • Mélanie Volral

    ()
    (Centre de Recherche Warocqué, Université de Mons-Hainaut, Belgium)

Abstract

The objective of this paper is to model and estimate the impact of labour training financed by the firm on labour demand in Belgium, introducing training potential productivity and cost effects. To model this influence, we assume profit maximizing firms producing under a short run monopolistic competition regime. We emphasize that training variables, both qualitative and quantitative, can either increase labour demand through their positive effect on labour physical productivity net from the dropping price required to sell additional production, and that they can decrease labour demand through induced increasing direct labour costs and wages. GMM estimations on a panel of 269 firms observed during the period 1998-2004 show non significant impacts of training variables on labour demand, the productivity and cost effects seeming to offset each other. These results allow us to suggest two scenarios in terms of firms and workers behaviour and that subsidiary training could favour employment under the two assumptions that firms don’t transform training in an increased productivity – wage mark-up, but convert additional productivity in employment, and workers don’t claim for higher wages as a result of additional productivity.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0021_lhwpaper.pdf
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Bibliographic Info

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0021.

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Length: 23 pages
Date of creation: May 2008
Date of revision:
Handle: RePEc:iso:educat:0021

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Keywords: Training; Labour Demand; Human capital; Labour Productivity; Panel Data;

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  1. Lorraine Dearden & Howard Reed & John Van Reenen, 2005. "The impact of training on productivity and wages: evidence from British panel data," IFS Working Papers W05/16, Institute for Fiscal Studies.
  2. Maarten Goos & Jozef Konings, 2001. "Does Rent-Sharing Exist in Belgium ?. An Empirical Analysis Using Firm Level Data," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(1), pages 65-79.
  3. Daron Acemoglu & Joern-Steffen Pischke, 1998. "Beyond Becker: Training in Imperfect Labor Markets," Working papers 98-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Maarten Goos & Jozef Konings, 2000. "Does Rent-Sharing Exist in Belgium? an Empirical Analysis Using Firm Level Data," Center for Economic Studies - Discussion papers ces0019, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  5. Almeida, Rita & Carneiro, Pedro, 2009. "The return to firm investments in human capital," Labour Economics, Elsevier, vol. 16(1), pages 97-106, January.
  6. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, vol. 12(4), pages 557-576, August.
  7. Keld Laursen & Nicolai J. Foss, 2003. "New human resource management practices, complementarities and the impact on innovation performance," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 243-263, March.
  8. Almeida, Rita K. & Carneiro, Pedro, 2006. "The Return to the Firm Investment in Human Capital," IZA Discussion Papers 1937, Institute for the Study of Labor (IZA).
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