The effect of quantitative and qualitative training on labour demand in Belgium: a monopolistic competition approach

Benoit Mahy and Mélanie Volral
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Benoit Mahy: Centre de Recherche Warocque, Universite de Mons-Hainaut, Belgium

No 21, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: The objective of this paper is to model and estimate the impact of labour training financed by the firm on labour demand in Belgium, introducing training potential productivity and cost effects. To model this influence, we assume profit maximizing firms producing under a short run monopolistic competition regime. We emphasize that training variables, both qualitative and quantitative, can either increase labour demand through their positive effect on labour physical productivity net from the dropping price required to sell additional production, and that they can decrease labour demand through induced increasing direct labour costs and wages. GMM estimations on a panel of 269 firms observed during the period 1998-2004 show non significant impacts of training variables on labour demand, the productivity and cost effects seeming to offset each other. These results allow us to suggest two scenarios in terms of firms and workers behaviour and that subsidiary training could favour employment under the two assumptions that firms don't transform training in an increased productivity – wage mark-up, but convert additional productivity in employment, and workers don't claim for higher wages as a result of additional productivity.

Keywords: Training; Labour Demand; Human capital; Labour Productivity; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 J23 J24 M53 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008-05
New Economics Papers: this item is included in nep-bec, nep-eec, nep-hrm and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:iso:educat:0021

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