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Employee training and firm performance: Evidence from ESF grant applications

Author

Listed:
  • Pedro S. Martins

Abstract

As work changes, firm-provided training may become more relevant. However, there is little causal evidence about the effects of training on firms. This paper studies a large training grants programme in Portugal, supported by the European Social Fund, contrasting firms that received the grants and firms that also applied but were unsuccessful. Combining several rich data sets, we compare many potential outcomes of these firms, while following them over several years both before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports (although not profits). These effects tend to be of at least 5% and, in some cases, 10% or more, and are robust in multiple dimensions.

Suggested Citation

  • Pedro S. Martins, 2021. "Employee training and firm performance: Evidence from ESF grant applications," OECD Productivity Working Papers 23, OECD Publishing.
    • Handle: RePEc:oec:ecoaac:23-en
    DOI: 10.1787/dbbafcc4-en
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    Cited by:

    1. Shokhrukh Khasanov & Masato Hiwatari, 2025. "Firm productivity and manufacturing exports in transition economies: An institutional and trade geography perspective," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-30, February.
    2. Brunello, Giorgio & Rückert, Désirée & Weiss, Christoph & Wruuck, Patricia, 2023. "Advanced digital technologies and investment in employee training: Complements or substitutes?," EIB Working Papers 2023/01, European Investment Bank (EIB).
    3. Caliendo, Marco & Cobb-Clark, Deborah A. & Pfeifer, Harald & Uhlendorff, Arne & Wehner, Caroline, 2024. "Managers’ risk preferences and firm training investments," European Economic Review, Elsevier, vol. 161(C).
    4. Quan, Siying & Cheng, Peng & Zhai, Jia, 2025. "Diabetes burden and firm value: The role of labor," International Review of Financial Analysis, Elsevier, vol. 103(C).
    5. Owoo, Nkechi S. & Amankwah, Akuffo & Castaing, Pauline & Palacios-Lopez, Amparo, 2024. "Household Business Performance in Ghana : The Role of Personality Traits and Gender Role Attitudes," Policy Research Working Paper Series 10804, The World Bank.
    6. Marco Caliendo & Deborah A. Cobb-Clark & Katrin Huber & Harald Pfeifer & Arne Uhlendorff & Sophie Wagner, 2025. "When Managers Choose: Gender Disparities in Employer Training Provision," CEPA Discussion Papers 90, Center for Economic Policy Analysis.
    7. Miguel Jaramillo & Bruno Escobar, 2022. "Employment protection legislation and on-the-job training in an informal labor market: Evidence from Peru," Working Papers 184, Peruvian Economic Association.
    8. Giorgio Brunello & Áron Gereben & Désirée Rückert & Christoph Weiss & Patricia Wruuck, 2022. "Do investments in human and physical capital respond differently to financing constraints?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-14, December.
    9. Jiang, Lihan & He, Yiyao & Jiang, Haiwei, 2024. "Impacts of digital-technology adoption on workers: A simple model and evidence from China," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    10. Dai, Li & Martins, Pedro S., 2024. "Does vocational education pay off in China? Evidence from city-level education supply shocks," Economic Modelling, Elsevier, vol. 140(C).
    11. Gashi Ardiana & Adnett Nick J., 2024. "The Determinants of the Incidence of Employer-Provided Training in the Western Balkans," South East European Journal of Economics and Business, Sciendo, vol. 19(1), pages 113-122.

    More about this item

    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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