IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11054.html
   My bibliography  Save this paper

Product Market Competition and Employer Provided Training in Germany

Author

Listed:
  • Heywood, John S.

    (University of Wisconsin, Milwaukee)

  • Jirjahn, Uwe

    (University of Trier)

  • Pfister, Annika

    (University of Trier)

Abstract

Using German establishment data, this paper examines the relationship between product market competition and the extent of employer provided training. We demonstrate that high product market competition is associated with increased training except when the competition is so severe as to threaten liquidation to a firm. We take this as evidence of an inverted U-shaped relationship. We also make clear that while this relationship is very evident for the service sector it is largely missing for manufacturing where we confirm earlier results of no relationship.

Suggested Citation

  • Heywood, John S. & Jirjahn, Uwe & Pfister, Annika, 2017. "Product Market Competition and Employer Provided Training in Germany," IZA Discussion Papers 11054, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11054
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11054.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bassanini, Andrea & Brunello, Giorgio, 2007. "Barriers to Entry, Deregulation and Workplace Training," IZA Discussion Papers 2746, Institute of Labor Economics (IZA).
    2. Brunello, Giorgio & Gambarotto, Francesca, 2007. "Do spatial agglomeration and local labor market competition affect employer-provided training? Evidence from the UK," Regional Science and Urban Economics, Elsevier, vol. 37(1), pages 1-21, January.
    3. Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), 2011. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 4, number 4, June.
    4. Muehlemann, Samuel & Wolter, Stefan C., 2007. "Regional effects on employer-provided training: Evidence from apprenticeship training in Switzerland," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 135-147.
    5. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
    6. Wolter, Stefan C. & Ryan, Paul, 2011. "Apprenticeship," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 11, pages 521-576, Elsevier.
    7. Richard B. Freeman & Edward P. Lazear, 1995. "An Economic Analysis of Works Councils," NBER Chapters, in: Works Councils: Consultation, Representation, and Cooperation in Industrial Relations, pages 27-52, National Bureau of Economic Research, Inc.
    8. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    9. Uwe Jirjahn & Jens Mohrenweiser & Uschi Backes‐Gellner, 2011. "Works Councils and Learning: On the Dynamic Dimension of Codetermination," Kyklos, Wiley Blackwell, vol. 64(3), pages 427-447, August.
    10. Lorraine Dearden & Howard Reed & John Van Reenen, 2006. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 397-421, August.
    11. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 79-119.
    12. Thomas J. Kane & Dietmar Harhoff, 1997. "Is the German apprenticeship system a panacea for the U.S. labor market?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(2), pages 171-196.
    13. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1409-1448.
    14. Michael Peneder & Martin Woerter, 2014. "Competition, R&D and innovation: testing the inverted-U in a simultaneous system," Journal of Evolutionary Economics, Springer, vol. 24(3), pages 653-687, July.
    15. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2010. "Does Product Market Competition Lead Firms to Decentralize?," American Economic Review, American Economic Association, vol. 100(2), pages 434-438, May.
    16. repec:dau:papers:123456789/10093 is not listed on IDEAS
    17. David Blanchflower & Stephen Machin, 1996. "Product Market Competition Wages and Productivity: International Evidence from Establishment-Level Data," Annals of Economics and Statistics, GENES, issue 41-42, pages 219-253.
    18. Daron Acemoglu, 1997. "Training and Innovation in an Imperfect Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(3), pages 445-464.
    19. William Greene, 2004. "The behaviour of the maximum likelihood estimator of limited dependent variable models in the presence of fixed effects," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 98-119, June.
    20. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
    21. Giorgio Brunello & Pietro Garibaldi & Etienne Wasmer, 2007. "Education and training in Europe," SciencePo Working papers Main hal-03415950, HAL.
    22. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
    23. Jozef Konings & Stijn Vanormelingen, 2015. "The Impact of Training on Productivity and Wages: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 485-497, May.
    24. Ardiana N. Gashi & Geoff Pugh & Nick Adnett, 2008. "Technological change and employer-provided training: Evidence from German establishments," Economics of Education Working Paper Series 0026, University of Zurich, Department of Business Administration (IBW).
    25. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra‐Firm Wage Dispersion Among Blue‐Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.
    26. Philippe Askenazy & Christophe Cahn & Delphine Irac, 2013. "Competition, R&D, and the cost of innovation: evidence for France," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 293-311, April.
    27. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-1158, December.
    28. Lynch, Lisa M. (ed.), 1994. "Training and the Private Sector," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226498102, December.
    29. Derek C. Jones & Panu Kalmi & Antti Kauhanen, 2012. "The effects of general and firm-specific training on wages and performance: evidence from banking," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 151-175, January.
    30. repec:zbw:bofrdp:2007_010 is not listed on IDEAS
    31. Lalith Munasinghe & Brendan O'Flaherty, 2005. "Specific Training Sometimes Cuts Wages and Always Cuts Turnover," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 213-234, April.
    32. Alan B. Krueger, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984–1989," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(1), pages 33-60.
    33. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    34. Patrik Gustavsson Tingvall & Andreas Poldahl, 2006. "Is there really an inverted U-shaped relation between competition and R&D?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(3), pages 101-118.
    35. Seyda, Susanne & Werner, Dirk, 2014. "IW-Weiterbildungserhebung 2014: Höheres Engagement und mehr Investitionen in betriebliche Weiterbildung," IW-Trends – Vierteljahresschrift zur empirischen Wirtschaftsforschung, Institut der deutschen Wirtschaft (IW) / German Economic Institute, vol. 41(4), pages 53-66.
    36. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence from A Panel of British and French Establishments," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1449-1492.
    37. Ardiana N. Gashi & Geoff Pugh & Nick Adnett, 2010. "Technological change and employer‐provided training: evidence from UK workplaces," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(4), pages 426-448, July.
    38. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-562, October.
    39. Brunello, Giorgio & De Paola, Maria, 2008. "Training and economic density: Some evidence form Italian provinces," Labour Economics, Elsevier, vol. 15(1), pages 118-140, February.
    40. Xavier Vives, 2008. "Innovation And Competitive Pressure," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 419-469, December.
    41. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 339-376.
    42. Bos, Jaap W.B. & Kolari, James W. & van Lamoen, Ryan C.R., 2013. "Competition and innovation: Evidence from financial services," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1590-1601.
    43. Richard Blundell & Lorraine Dearden & Costas Meghir & Barbara Sianesi, 1999. "Human capital investment: the returns from education and training to the individual, the firm and the economy," Fiscal Studies, Institute for Fiscal Studies, vol. 20(1), pages 1-23, March.
    44. Brunello, Giorgio & Garibaldi, Pietro & Wasmer, Etienne (ed.), 2007. "Education and Training in Europe," OUP Catalogue, Oxford University Press, number 9780199210978.
    45. Lisa M. Lynch, 1994. "Training and the Private Sector: International Comparisons," NBER Books, National Bureau of Economic Research, Inc, number lync94-1, March.
    46. William Greene, 2004. "Fixed Effects and Bias Due to the Incidental Parameters Problem in the Tobit Model," Econometric Reviews, Taylor & Francis Journals, vol. 23(2), pages 125-147.
    47. repec:adr:anecst:y:1996:i:41-42:p:10 is not listed on IDEAS
    48. Katz, Eliakim & Ziderman, Adrian, 1990. "Shared investment in general training : the role of information," Policy Research Working Paper Series 535, The World Bank.
    49. Askenazy, P. & Cahn, C. & Irac, D., 2008. "Competition, R&D, and the Cost of Innovation," Working papers 197, Banque de France.
    50. Kuan Xu & Zhengxi Lin, 2011. "Participation In Workplace Employer‐Sponsored Training In Canada: Role Of Firm Characteristics And Worker Attributes," Contemporary Economic Policy, Western Economic Association International, vol. 29(3), pages 416-430, July.
    51. Rainer Winkelmann, 1996. "Employment Prospects and Skill Acquisition of Apprenticeship-Trained Workers in Germany," ILR Review, Cornell University, ILR School, vol. 49(4), pages 658-672, July.
    52. Hipp, Christiane & Grupp, Hariolf, 2005. "Innovation in the service sector: The demand for service-specific innovation measurement concepts and typologies," Research Policy, Elsevier, vol. 34(4), pages 517-535, May.
    53. Alison L. Booth & Mark L. Bryan, 2005. "Testing Some Predictions of Human Capital Theory: New Training Evidence from Britain," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 391-394, May.
    54. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute of Labor Economics (IZA).
    55. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
    56. Katja Görlitz & Joel Stiebale, 2011. "The Impact of Product Market Competition on Employers’ Training Investments. Evidence from German Establishment Panel Data," De Economist, Springer, vol. 159(1), pages 1-23, March.
    57. Bruce C. Skaggs & Mark Youndt, 2004. "Strategic positioning, human capital, and performance in service organizations: a customer interaction approach," Strategic Management Journal, Wiley Blackwell, vol. 25(1), pages 85-99, January.
    58. Tat‐kei Lai & Travis Ng, 2014. "The impact of product market competition on training provision: Evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(3), pages 856-888, August.
    59. Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), 2011. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 3, number 3, June.
    60. Sai Ding & Puyang Sun & Wei Jiang, 2016. "The Effect of Import Competition on Firm Productivity and Innovation: Does the Distance to Technology Frontier Matter?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(2), pages 197-227, April.
    61. Hans Gersbach & Armin Schmutzler, 2012. "Product markets and industry-specific training," RAND Journal of Economics, RAND Corporation, vol. 43(3), pages 475-491, September.
    62. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    63. Tatkei Lai & Travis Ng, 2014. "The impact of product market competition on training provision: Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 47(3), pages 856-888, August.
    64. Dan A. Black & Brett J. Noel & Zheng Wang, 1999. "On-the-Job Training, Establishment Size, and Firm Size: Evidence for Economies of Scale in the Production of Human Capital," Southern Economic Journal, John Wiley & Sons, vol. 66(1), pages 82-100, July.
    65. Joel Rogers & Wolfgang Streeck, 1995. "Works Councils: Consultation, Representation, and Cooperation in Industrial Relations," NBER Books, National Bureau of Economic Research, Inc, number roge95-1, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Benoit Dostie & Mohsen Javdani, 2020. "Immigrants and Workplace Training: Evidence from Canadian Linked Employer–Employee Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(2), pages 275-315, April.
    2. Annika Campaner & John S. Heywood & Uwe Jirjahn, 2022. "Flexible work organization and employer provided training: Evidence from German linked employer‐employee data," Kyklos, Wiley Blackwell, vol. 75(1), pages 3-29, February.
    3. Hinz, Tina & Stegmaier, Jens, 2018. "Providing a consistent measure of further training for the IAB Establishment Panel," FDZ Methodenreport 201802_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. John S. Heywood & John G. Sessions & Nikolaos Theodoropoulos, 2023. "Quality competition and worker training," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 935-943, October.
    5. Bilanakos, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2018. "Does demand for product quality increase worker training?," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 159-177.
    6. Burdin, Gabriel & Kato, Takao, 2021. "Complementarity in Employee Participation Systems," GLO Discussion Paper Series 968, Global Labor Organization (GLO).
    7. Brunello, Giorgio & Wruuck, Patricia, 2020. "Employer provided training in Europe: Determinants and obstacles," EIB Working Papers 2020/03, European Investment Bank (EIB).
    8. Tina Hinz & Jens Mohrenweiser, 2019. "Competition, Institutions and Company-sponsored Training," Economics of Education Working Paper Series 0162, University of Zurich, Department of Business Administration (IBW).
    9. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).
    10. repec:iab:iabfme:201802(en is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christos Bilanakos & Colin P. Green & John S. Heywood & Nikolaos Theodoropoulos, 2017. "Do Dominant Firms Provide More Training?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 67-95, February.
    2. Tina Hinz & Jens Mohrenweiser, 2019. "Competition, Institutions and Company-sponsored Training," Economics of Education Working Paper Series 0162, University of Zurich, Department of Business Administration (IBW).
    3. Bilanakosa, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2017. "Worker Training and Quality Competition," GLO Discussion Paper Series 137, Global Labor Organization (GLO).
    4. Dan A. Black & Lars Skipper & Jeffrey A. Smith & Jeffrey Andrew Smith, 2023. "Firm Training," CESifo Working Paper Series 10268, CESifo.
    5. Picchio, Matteo & van Ours, Jan C., 2011. "Market imperfections and firm-sponsored training," Labour Economics, Elsevier, vol. 18(5), pages 712-722, October.
    6. Marco Caliendo & Deborah A. Cobb-Clark & Cosima Obst & Helke Seitz & Arne Uhlendorff, 2022. "Locus of Control and Investment in Training," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1311-1349.
    7. By Barbara Mueller & Jürg Schweri, 2015. "How specific is apprenticeship training? Evidence from inter-firm and occupational mobility after graduation," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 1057-1077.
    8. Pedrini, Giulio & Cappiello, Giuseppe, 2022. "The impact of training on labour productivity in the European utilities sector: An empirical analysis," Utilities Policy, Elsevier, vol. 74(C).
    9. Bilanakos, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2018. "Does demand for product quality increase worker training?," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 159-177.
    10. Giulio Pedrini, 2017. "Law and economics of training: a taxonomy of the main legal and institutional tools addressing suboptimal investments in human capital development," European Journal of Law and Economics, Springer, vol. 43(1), pages 83-105, February.
    11. Christian Dustmann & Uta Schönberg, 2012. "What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 36-61, April.
    12. Christos Bilanakos & John S. Heywood & John G. Sessions & Nikolaos Theodoropoulos, 2018. "Does Delegation Increase Worker Training?," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1089-1115, April.
    13. Werner Eichhorst & Núria Rodríguez-Planas & Ricarda Schmidl & Klaus F. Zimmermann, 2015. "A Road Map to Vocational Education and Training in Industrialized Countries," ILR Review, Cornell University, ILR School, vol. 68(2), pages 314-337, March.
    14. Katja Görlitz & Joel Stiebale, 2011. "The Impact of Product Market Competition on Employers’ Training Investments. Evidence from German Establishment Panel Data," De Economist, Springer, vol. 159(1), pages 1-23, March.
    15. Bassanini, Andrea & Brunello, Giorgio, 2011. "Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe," European Economic Review, Elsevier, vol. 55(8), pages 1152-1176.
    16. Annika Campaner & John S. Heywood & Uwe Jirjahn, 2022. "Flexible work organization and employer provided training: Evidence from German linked employer‐employee data," Kyklos, Wiley Blackwell, vol. 75(1), pages 3-29, February.
    17. Görlitz Katja, 2010. "The Development of Employers’ Training Investments Over Time – A Decomposition Analysis Using German Establishment Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(2), pages 186-207, April.
    18. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.
    19. Achyuta Adhvaryu & Namrata Kala & Anant Nyshadham, 2018. "The Skills to Pay the Bills: Returns to On-the-job Soft Skills Training," NBER Working Papers 24313, National Bureau of Economic Research, Inc.
    20. Christos Bilanakos & John S. Heywood & John Sessions & Nikolaos Theodoropoulos, 2016. "Delegation and worker training," University of Cyprus Working Papers in Economics 06-2016, University of Cyprus Department of Economics.

    More about this item

    Keywords

    competition; employer provided training; manufacturing; services;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L00 - Industrial Organization - - General - - - General
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp11054. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.