Financing Constraints and Employers' Investment in Training

Giorgio Brunello, Áron Gereben, Christoph Weiss and Patricia Wruuck
Additional contact information
Patricia Wruuck: European Investment Bank

No 13067, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using a representative sample of European firms, we study whether and to what extent financing constraints affect employers' decision to invest in employee training. We combine survey data on investment activities with administrative data on financial statements to develop an index of financing constraints. We estimate that a 10 percent increase in this index reduces investment in training as a share of fixed assets by 2.9 to 4.5 percent and investment in training per employee by 1.8 to 2.5 percent. We document that lower investment in training reduces productivity, and show that firms facing tighter financing constraints cut back the investment in training and tangible assets less than the investment in R&D and software and data.

Keywords: financing constraints; training; Europe (search for similar items in EconPapers)
JEL-codes: J24 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2020-03
New Economics Papers: this item is included in nep-cfn, nep-eur and nep-lma
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Citations: View citations in EconPapers (2)

Published - published as 'Do investments in human and physical capital respond differently to financing constraints?' in: Swiss Journal of Economics and Statistics, 2022, 158, 10(2022)

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Working Paper: Financing constraints and employers' investment in training (2020)
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