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The impact of training on productivity and wages: evidence from British panel data

  • Lorraine Dearden


    (Institute for Fiscal Studies and Institute for Fiscal Studies and Department of Quantitative Social Science Institute of Education, University of London)

  • Howard Reed

    (Institute for Fiscal Studies)

  • John Van Reenen

    (Institute for Fiscal Studies)

It is standard in the literature on training to use wages as a sufficient statistic for productivity. This paper examines the effects of work-related training on direct measures of productivity. Using a new panel of British industries 1983-1996 and a variety of estimation techniques we find that work-related training is associated with significantly higher productivity. A one percentage point increase in training is associated with an increase in value added per hour of about 0.6% and an increase in hourly wages of about 0.3%. We also show evidence using individual level datasets that is suggestive of training externalities.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W05/16.

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Length: 39 pp.
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:ifs:ifsewp:05/16
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