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Employee training and firm performance: Evidence from ESF grant applications

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  • Martins, Pedro S.

Abstract

As work changes, firm-provided training may be particularly relevant. However, there is little causal evidence about the effects of training on firms. This paper studies a large training grants programme supported by the European Social Fund, contrasting firms in Portugal that received the grants and others that also applied but were unsuccessful. Combining several rich data sets, we compare a large number of potential outcomes of these firms, while following them over several years both before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports. These effects tend to be of at least 5% and, in some cases, 10% or more, and are robust in multiple dimensions.

Suggested Citation

  • Martins, Pedro S., 2021. "Employee training and firm performance: Evidence from ESF grant applications," Labour Economics, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:labeco:v:72:y:2021:i:c:s0927537121000919
    DOI: 10.1016/j.labeco.2021.102056
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    Cited by:

    1. Shokhrukh Khasanov & Masato Hiwatari, 2025. "Firm productivity and manufacturing exports in transition economies: An institutional and trade geography perspective," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-30, February.
    2. Brunello, Giorgio & Rückert, Désirée & Weiss, Christoph & Wruuck, Patricia, 2023. "Advanced digital technologies and investment in employee training: Complements or substitutes?," EIB Working Papers 2023/01, European Investment Bank (EIB).
    3. Caliendo, Marco & Cobb-Clark, Deborah A. & Pfeifer, Harald & Uhlendorff, Arne & Wehner, Caroline, 2024. "Managers’ risk preferences and firm training investments," European Economic Review, Elsevier, vol. 161(C).
    4. Miguel Jaramillo & Bruno Escobar, 2022. "Employment protection legislation and on-the-job training in an informal labor market: Evidence from Peru," Working Papers 184, Peruvian Economic Association.
    5. Giorgio Brunello & Áron Gereben & Désirée Rückert & Christoph Weiss & Patricia Wruuck, 2022. "Do investments in human and physical capital respond differently to financing constraints?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-14, December.
    6. Gashi Ardiana & Adnett Nick J., 2024. "The Determinants of the Incidence of Employer-Provided Training in the Western Balkans," South East European Journal of Economics and Business, Sciendo, vol. 19(1), pages 113-122.

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    More about this item

    Keywords

    Training subsidies; Productivity; Programme evaluation;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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