Productivity, Wages, and the Returns to Firm-Provided Training: Fair Share Capitalism?
In this study, we develop an alternative modelling that examines a) the determinants of firm productivity and wages and b) the internal rate of return (IRR) to firm training for both firms and workers. Using a six-year linked employer-employee dataset, our estimates indicate that an additional hour of training per worker results in an increase of 0.12% in productivity and 0.04% in wages, or an increase of 0.16% and 0.08%, respectively, if one uses firm training as a stock variable. We then find that 82% of the gains in productivity are captured by firms and 18% by workers. Given the training costs, we finally obtain an IRR of 13% for firms and 33% for workers at sample means. Firms are heterogeneous, and we do find that dispersion in the rates of return across firms is high.
|Date of creation:||Apr 2010|
|Date of revision:||Jul 2012|
|Publication status:||Published in International Journal of Manpower 34(7): 776-793, 2013.|
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CeMMAP working papers
CWP21/05, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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- Lorraine Dearden & Howard Reed & John Van Reenen, 2005.
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IFS Working Papers
W05/16, Institute for Fiscal Studies.
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- Ana Sofia Lopes & Paulino Teixeira, 2009. "Unobserved Worker Ability, Firm Heterogeneity, and the Returns to Schooling and Training," GEMF Working Papers 2009-03, GEMF - Faculdade de Economia, Universidade de Coimbra.
- Budría, Santiago & Pereira, Pedro T., 2004. "On the Returns to Training in Portugal," IZA Discussion Papers 1429, Institute for the Study of Labor (IZA).
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