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The Impact of Training on Productivity: Evidence from a Large Panel of Firms

Author

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  • Emilio Colombo
  • Luca Stanca

Abstract

This paper investigates the e®ects of training on labor productiv- ity using a unique nationally representative panel of Italian ¯rms for the period 2002 to 2005. We ¯nd that training has a positive and signi¯cant e®ect on productivity. Using a variety of panel estimation techniques, we show that failing to account for unobserved heterogene- ity leads to overestimate the impact of training on productivity, while failing to account for endogeneity leads to substantially underestimate it. Training also has a positive and signi¯cant impact on wages, but this e®ect is about half the size of the e®ect on productivity. Within occupational groups, the e®ect of training on productivity is large and signi¯cant for blue-collars, but small and not signi¯cant for white collars.

Suggested Citation

  • Emilio Colombo & Luca Stanca, 2008. "The Impact of Training on Productivity: Evidence from a Large Panel of Firms," Working Papers 134, University of Milano-Bicocca, Department of Economics, revised Jan 2008.
    • Handle: RePEc:mib:wpaper:134
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    Cited by:

    1. Mai Huong Giang & Tran Dang Xuan & Bui Huy Trung & Mai Thanh Que & Yuichiro Yoshida, 2018. "Impact of Investment Climate on Total Factor Productivity of Manufacturing Firms in Vietnam," Sustainability, MDPI, vol. 10(12), pages 1-18, December.
    2. Tanoli, Mubashar Farooq, 2016. "Impact of Training and Mentoring on Employee Performance - Empirical analysis of Public and Private Universities’ staff members of Islamabad," MPRA Paper 74956, University Library of Munich, Germany, revised 07 Nov 2016.
    3. Andrea Rey-Martí & J. Augusto Felício & Ricardo Rodrigues, 2017. "Entrepreneurial attributes for success in the small hotel sector: a fuzzy-set QCA approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(5), pages 2085-2100, September.
    4. Joe-Okidi, Precious Ogbeyalu & Amah, Edwinah (PhD) & Okocha, Belemenanya Friday (PhD), 2022. "Career Development Strategies and Employees Effectiveness of Hotels in Rivers State," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 9(8), pages 55-61, August.
    5. Giuseppe Croce & Emanuela Ghignoni, 2012. "Employer-provided Training and Knowledge Spillovers: Evidence from Italian Local Labour Markets," Regional Studies, Taylor & Francis Journals, vol. 46(3), pages 339-353, May.
    6. Rosanna Pittiglio & Filippo Reganati & Edgardo Sica, 2015. "Do Multinational Enterprises Push up the Wages of Domestic Firms in the Italian Manufacturing Sector?," Manchester School, University of Manchester, vol. 83(3), pages 346-378, June.
    7. Giuseppe Croce & Edoardo Di Porto & Emanuela Ghignoni & Andrea Ricci, 2013. "Employer education, agglomeration and workplace training: poaching vs knowledge spillovers," Working Papers in Public Economics 162, University of Rome La Sapienza, Department of Economics and Law.
    8. Jalal Hanaysha, 2016. "Testing the Effects of Employee Empowerment, Teamwork, and Employee Training on Employee Productivity in Higher Education Sector," International Journal of Learning and Development, Macrothink Institute, vol. 6(1), pages 164-178, March.
    9. Francesca Sgobbi, 2016. "Train the worst or train the best? The determinants of employer-sponsored training in five European countries," Working Papers 29, Birkbeck Centre for Innovation Management Research, revised Jan 2016.
    10. Andrea Filippetti & Frederick Guy & Simona Iammarino, 2015. "Does training help in times of crisis? Training in employment in Northern and Southern Italy," Working Papers 28, Birkbeck Centre for Innovation Management Research, revised Dec 2015.
    11. Elena Feltrinelli & Roberto Gabriele & Sandro Trento, 2013. "Do middle managers matter?," DEM Discussion Papers 2013/11, Department of Economics and Management.
    12. Mehmet Huseyin Bilgin & Chi Keung Marco Lau & Ender Demir, 2012. "Technology Transfer, Finance Channels, And Sme Performance: New Evidence From Developing Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 57(03), pages 1-20.
    13. Iammarino, Simona & Guy, Frederick & Filippetti, Andrea, 2019. "Regional disparities in the effect of training on employment," LSE Research Online Documents on Economics 87466, London School of Economics and Political Science, LSE Library.
    14. Guerrazzi, Marco, 2014. "Workforce ageing and the training propensity of Italian firms: cross-sectional evidence from the INDACO survey," MPRA Paper 56826, University Library of Munich, Germany.
    15. Liu, Qing & Lu, Ruosi, 2016. "On-the-job training and productivity: Firm-level evidence from a large developing country," China Economic Review, Elsevier, vol. 40(C), pages 254-264.
    16. Rita Almeida & Reyes Aterido, 2015. "Investing in formal on-the-job training: are SMEs lagging much behind?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-23, December.
    17. Mohamad Yunus, Norhanishah & Said, Rusmawati & Law, Siong Hook, 2014. "Do Cost of Training, Education Level and R&D Investment Matter towards Influencing Labour Productivity?," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 133-142.

    More about this item

    Keywords

    On-the-Job-Training; Productivity; Wages; Panel Data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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