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Training and Hiring Strategies to Improve Firm Performance

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Author Info
Mika Maliranta
Rita Asplund

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Abstract

ABSTRACT : We study how upgrading the skills of the personnel affects a firm’s performance. Two different strategies are examined : 1) providing formal training and 2) strategic recruitment and separation policy. The use of register-based longitudinal employer-employee data supplemented with a survey on vocational training provides an opportunity to shed fresh light on the issue and allows us to address the usual econometric problems. We find that internally (but not externally) organized training stimulates subsequent growth of performance but only when combined with the implementation of new process or product technology. Hiring highly skilled workers is initially costly to firms but is productivity-enhancing in the long run.

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Publisher Info
Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1105.

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Length: 45 pages
Date of creation: 16 Nov 2007
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Handle: RePEc:rif:dpaper:1105

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Related research
Keywords: productivity profitability training education hiring

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Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
O3 - Economic Development, Technological Change, and Growth - - Technological Change
D2 - Microeconomics - - Production and Organizations

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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. [Downloadable!]
  2. Lopez-Acevedo, Gladys & Tinajero, Monica & Rubio, Marcela, 2005. "Mexico : human capital effects on wages and productivity," Policy Research Working Paper Series 3791, The World Bank. [Downloadable!]
  3. Hong Tan & Yevgeniya Savchenko & Vladimir Gimpelson & Rostislav Kapelyushnikov & Anna Lukyanova, 2007. "Skills Shortages and Training in Russian Enterprises," IZA Discussion Papers 2751, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Ottersten, Eugenia Kazamaki & Lindh, Thomas & Mellander, Erik, 1999. "Evaluating Firm Training, Effects on Performance and Labour Demand," Applied Economics Letters, Taylor and Francis Journals, vol. 6(7), pages 431-37, July. [Downloadable!] (restricted)
  5. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October. [Downloadable!] (restricted)
  6. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, vol. 12(4), pages 557-576, August. [Downloadable!] (restricted)
  7. Lukyanova, Anna & Kapelyushnikov, Rostislav & Gimpelson, Vladimir & Savchenko, Yevgeniya & Tan, Hong, 2007. "Skills shortages and training in Russian enterprises," Policy Research Working Paper Series 4222, The World Bank. [Downloadable!]
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  11. Sandra E. Black & Lisa M. Lynch, 2001. "How To Compete: The Impact Of Workplace Practices And Information Technology On Productivity," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 434-445, August. [Downloadable!] (restricted)
    Other versions:
  12. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1989. "Job Matching and On-the-Job Training," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 1-19, January. [Downloadable!] (restricted)
  13. 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. [Downloadable!]
    Other versions:
  14. Blomstrom, Magnus & Lipsey, Robert E & Zejan, Mario, 1996. "Is Fixed Investment the Key to Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 269-76, February. [Downloadable!] (restricted)
    Other versions:
  15. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November. [Downloadable!] (restricted)
  16. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence From A Panel Of British And French Establishments," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1449-1492, November. [Downloadable!] (restricted)
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  17. Giorgio Marrano, Mauro & Haskel, Jonathan, 2007. "How Much Does the UK Invest in Intangible Assets?," CEPR Discussion Papers 6287, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  18. Mirko Draca & Raffaella Sadun & John Van Reenen, 2006. "Productivity and ICT: A Review of the Evidence," CEP Discussion Papers dp0749, Centre for Economic Performance, LSE. [Downloadable!]
  19. Rita Almeida & Pedro Carneiro, 2006. "The Return to the Firm Investment in Human Capital," IZA Discussion Papers 1937, Institute for the Study of Labor (IZA). [Downloadable!]
  20. Almeida, Rita & Carneiro, Pedro, 2006. "The return to firm investment in human capital," Policy Research Working Paper Series 3851, The World Bank. [Downloadable!]
    Other versions:
  21. Lopez-Acevedo, Gladys, 2003. "Wages and productivity in Mexican manufacturing," Policy Research Working Paper Series 2964, The World Bank. [Downloadable!]
  22. Hong Tan & Lopez-Acevedo, Gladys, 2003. "Mexico : in-firm training for the knowledge economy," Policy Research Working Paper Series 2957, The World Bank. [Downloadable!]
  23. Groot, Wim, 1999. "Productivity Effects of Enterprise-Related Training," Applied Economics Letters, Taylor and Francis Journals, vol. 6(6), pages 369-71, June. [Downloadable!] (restricted)
  24. Alan B. Krueger & Mikael Lindahl, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December. [Downloadable!] (restricted)
    Other versions:
  25. Andrea Bassanini & Alison Booth & Giorgio Brunello & Maria De Paola & Edwin Leuven, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA). [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Antti Lönnqvist, 2007. "Intellectual Capital and Productivity: Identification and the Measurement of the Relationship at Company-level," Discussion Papers 1108, The Research Institute of the Finnish Economy. [Downloadable!]
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