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The Impact of Training on Productivity and Wages: Firm-Level Evidence

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  • Jozef Konings

    (KU Leuven and University of Ljubljana)

  • Stijn Vanormelingen

    (KU Leuven)

Abstract

This paper uses firm-level panel data of on-the-job training to estimate its impact on productivity and wages. To this end, we apply and extend the control function approach for estimating production functions, which allows us to correct for the endogeneity of input factors and training. We find that the productivity premium of a trained worker is substantially higher compared to the wage premium. Our results are consistent with recent theories that explain work-related training by imperfect competition in the labor market. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • 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.
    • Handle: RePEc:tpr:restat:v:97:y:2015:i:2:p:485-497
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    More about this item

    Keywords

    productivity; wages; firm-level; on-the-job; control function; production functions; endogeneity; productivity premium; wage premium; labor market;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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