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Credit constraints and investment in human capital: training evidence from transition economies

  • Popov, Alexander

Using a unique survey database of 8265 firms from 25 transition economies, I find that lack of access to finance in general, and to bank credit in particular, is associated with significantly lower investment in on-the-job training. This effect is stronger in education-intensive industries and in industries facing good global growth opportunities. To address endogeneity issues, I use the structure of local credit markets as an instrument for credit constraints at the firm-level. In addition, in panel estimates, I control for the presence of unobserved firm-level heterogeneity, as well as for changes in macroeconomic conditions. JEL Classification: G10, J21, J24, M53

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Paper provided by European Central Bank in its series Working Paper Series with number 1606.

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Date of creation: Nov 2013
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Handle: RePEc:ecb:ecbwps:20131606
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