IDEAS home Printed from https://ideas.repec.org/p/lic/licosd/19708.html

The Impact of Training on Productivity and Wages. Evidence from Belgian Firm Level Panel Data

Author

Listed:
  • Jozef Konings

Abstract

This paper uses longitudinal data of more than 13,000 firms to analyze the effects of on-the-job training on firm level productivity and wages. Workers receiving training are on average more productive than workers not receiving training. This makes firms more productive. On-the-job training increases firm level measured productivity between 1 and 2%, compared to firms that do not provide training. The effect of training on wages is also positive, but much lower than the effect on productivity. Average wages increase only by 0.5%. Sectoral spillovers between firms that train workers are found, but only in firms active in the manufacturing sector. In non-manufacturing no spillovers seem to take place. The results are consistent with recent theories that explain on-the-job training, related to imperfect competition in the labor market, such as monopsony and union bargaining.

Suggested Citation

  • Jozef Konings, 2008. "The Impact of Training on Productivity and Wages. Evidence from Belgian Firm Level Panel Data," LICOS Discussion Papers 19708, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    • Handle: RePEc:lic:licosd:19708
    as

    Download full text from publisher

    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp197.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aitken, Brian & Harrison, Ann & DEC, 1994. "Do domestic firms benefit from foreign direct investment? Evidence from panel data," Policy Research Working Paper Series 1248, The World Bank.
    2. Lorraine Dearden & Howard Reed & John Van Reenen, 2006. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 397-421, August.
    3. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
    4. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    5. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Preeya Mohan & Eric Strobl & Patrick Watson, 2018. "In-firm training, innovation and productivity: the case of Caribbean Small Island Developing States," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 30(9-10), pages 987-1011, October.
    2. Pardesi, Mantej, 2024. "Productivity convergence and firm’s training strategy," ROA Research Memorandum 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    3. Pardesi, Mantej, 2024. "Productivity Convergence and Firm’s Training Strategy," Research Memorandum 003, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Preeya Mohan & Eric Strobl & Patrick Watson, 2017. "In-Firm Training, Innovation and Productivity: The Case of Caribbean Small Island Developing States," IDB Publications (Working Papers) 98136, Inter-American Development Bank.
    5. Ji Yong Lee & Allen Featherstone & Rodolfo M. Nayga & Doo Bong Han, 2019. "The Long-Run and Short-Run Effects of Ethanol Production on U.S. Beef Producers," Sustainability, MDPI, vol. 11(6), pages 1-14, March.
    6. Benoit Mahy & Mélanie Volral, 2011. "Firm Training and Labour Demand in Belgium :Does Productivity Dominate Cost Effects ?," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 54(4), pages 367-388.
    7. Akram Ali Jouda & Ungku Norulkamar Ungku Ahmad & Khalid Abed Dahleez, 2016. "The Impact of Human Resource Management Practices on Employees Performance: The Case of Islamic University of Gaza in Palestine," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 1080-1088.
    8. Akram Ali Jouda & Ungku Norulkamar Ungku Ahmad & Khalid Abed Dahleez, 2016. "The Impact of Human Resource Management Practices on Employees Performance: The Case of Islamic University of Gaza in Palestine," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 1080-1088.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grossmann, Volker & Steger, Thomas M., 2008. "Anti-competitive conduct, in-house R&D, and growth," European Economic Review, Elsevier, vol. 52(6), pages 987-1008, August.
    2. Massimo Colombo & Annalisa Croce & Samuele Murtinu, 2014. "Ownership structure, horizontal agency costs and the performance of high-tech entrepreneurial firms," Small Business Economics, Springer, vol. 42(2), pages 265-282, February.
    3. Joseph A. Clougherty & Klaus Gugler & Lars Sørgard, 2012. "Cross-Border Mergers and Domestic Wages: Integrating Positive 'Spillover' Effects and Negative 'Bargaining' Effects," Department of Economics Working Papers wuwp136, Vienna University of Economics and Business, Department of Economics.
    4. John S Heywood & Uwe Jirjahn & Annika Pfister, 2020. "Product market competition and employer provided training in Germany," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(2), pages 533-556.
    5. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2007. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 482-496, August.
    6. Chetia, Pompi & Behera, Smruti Ranjan & Mishra, Tapas & Parhi, Mamta, 2025. "FDI spillovers, innovation and the role of industrial clusters: Evidence from innovative Indian manufacturing firms," Economic Modelling, Elsevier, vol. 152(C).
    7. Halaszovich, Tilo F. & Lundan, Sarianna M., 2016. "The moderating role of local embeddedness on the performance of foreign and domestic firms in emerging markets," International Business Review, Elsevier, vol. 25(5), pages 1136-1148.
    8. Jeon, Yongbok & Park, Byung Il & Ghauri, Pervez N., 2013. "Foreign direct investment spillover effects in China: Are they different across industries with different technological levels?," China Economic Review, Elsevier, vol. 26(C), pages 105-117.
    9. repec:got:cegedp:26 is not listed on IDEAS
    10. Atif Rao & Muhammad Ali & Jason M Smith, 2024. "Foreign direct investment and domestic innovation: Roles of absorptive capacity, quality of regulations and property rights," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-15, March.
    11. Valentine Fays & Benoît Mahy & François Rycx & Mélanie Volral, 2021. "Wage discrimination based on the country of birth: do tenure and product market competition matter?," Applied Economics, Taylor & Francis Journals, vol. 53(13), pages 1551-1571, March.
    12. Jorge Crespo & Francisco Javier Velázquez, 2003. "Multinationals and diffrsion of technology Between developed countries," European Economy Group Working Papers 26, European Economy Group.
    13. Peter, Klara Sabirianova & Svejnar, Jan & Terrell, Katherine, 2004. "Distance to the Efficiency Frontier and FDI Spillovers," IZA Discussion Papers 1332, IZA Network @ LISER.
    14. Dieter M. Urban, 2010. "FDI, Technology Spillovers, and Wages," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 443-453, August.
    15. Dettmann, Eva & Fackler, Daniel & Müller, Steffen & Neuschäffer, Georg & Slavtchev, Viktor & Leber, Ute & Schwengler, Barbara, 2020. "Innovationen in Deutschland - Wie lassen sich Unterschiede in den Betrieben erklären? : Ergebnisse aus dem IAB-Betriebspanel 2019," IAB-Forschungsbericht 202012, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    16. Thierry Tressel & Thierry Verdier, 2011. "Financial Globalization and the Governance of Domestic Financial Intermediaries," Journal of the European Economic Association, European Economic Association, vol. 9(1), pages 130-175, February.
    17. Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Contribute to Skill Upgrading in Developing Countries?," SCEPA working paper series. 2002-08, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    18. Andrew B. Bernard & Fredrik Sjoholm, 2003. "Foreign Owners and Plant Survival," NBER Working Papers 10039, National Bureau of Economic Research, Inc.
    19. Vujanović, Nina & Radošević, Slavo & Stojčić, Nebojša & Hisarciklilar, Mehtap & Hashi, Iraj, 2022. "FDI spillover effects on innovation activities of knowledge using and knowledge creating firms: Evidence from an emerging economy," Technovation, Elsevier, vol. 118(C).
    20. Schiffbauer, Marc, 2006. "Theoretical and methodological study on the role of public policies in fostering innovation and growth," Papers DYNREG04, Economic and Social Research Institute (ESRI).
    21. Krüger, Ralf & Ahlfeld, Sebastian, 2005. "Ausländische Direktinvestitionen in Entwicklungsländern: Eine überschätzte Wachstumsdeterminante?," Discussion Papers in Development Economics 31, Justus Liebig University Giessen, Institute for Development Economics.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lic:licosd:19708. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/licosbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.