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The Impact of Training on Productivity and Wages. Evidence from Belgian Firm Level Panel Data

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  • Jozef Konings

Abstract

This paper uses longitudinal data of more than 13,000 firms to analyze the effects of on-the-job training on firm level productivity and wages. Workers receiving training are on average more productive than workers not receiving training. This makes firms more productive. On-the-job training increases firm level measured productivity between 1 and 2%, compared to firms that do not provide training. The effect of training on wages is also positive, but much lower than the effect on productivity. Average wages increase only by 0.5%. Sectoral spillovers between firms that train workers are found, but only in firms active in the manufacturing sector. In non-manufacturing no spillovers seem to take place. The results are consistent with recent theories that explain on-the-job training, related to imperfect competition in the labor market, such as monopsony and union bargaining.

Suggested Citation

  • Jozef Konings, 2008. "The Impact of Training on Productivity and Wages. Evidence from Belgian Firm Level Panel Data," LICOS Discussion Papers 19708, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    • Handle: RePEc:lic:licosd:19708
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    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp197.pdf
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    References listed on IDEAS

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    1. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
    2. 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.
    3. 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.
    4. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    5. Aitken, Brian & Harrison, Ann & DEC, 1994. "Do domestic firms benefit from foreign direct investment? Evidence from panel data," Policy Research Working Paper Series 1248, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Benoit Mahy & Mélanie Volral, 2011. "Firm Training and Labour Demand in Belgium :Does Productivity Dominate Cost Effects ?," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 54(4), pages 367-388.
    2. Ji Yong Lee & Allen Featherstone & Rodolfo M. Nayga & Doo Bong Han, 2019. "The Long-Run and Short-Run Effects of Ethanol Production on U.S. Beef Producers," Sustainability, MDPI, vol. 11(6), pages 1-14, March.
    3. Preeya Mohan & Eric Strobl & Patrick Watson, 2018. "In-firm training, innovation and productivity: the case of Caribbean Small Island Developing States," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 30(9-10), pages 987-1011, October.
    4. Akram Ali Jouda & Ungku Norulkamar Ungku Ahmad & Khalid Abed Dahleez, 2016. "The Impact of Human Resource Management Practices on Employees Performance: The Case of Islamic University of Gaza in Palestine," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 1080-1088.
    5. Akram Ali Jouda & Ungku Norulkamar Ungku Ahmad & Khalid Abed Dahleez, 2016. "The Impact of Human Resource Management Practices on Employees Performance: The Case of Islamic University of Gaza in Palestine," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 1080-1088.
    6. Preeya Mohan & Eric Strobl & Patrick Watson, 2017. "In-Firm Training, Innovation and Productivity: The Case of Caribbean Small Island Developing States," IDB Publications (Working Papers) 98136, Inter-American Development Bank.

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    More about this item

    Keywords

    on-the-job-training; productivity; firm level data; monopsony;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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