Do labour hoarding practices stimulate training investments? Evidence from the Italian Great Recession

Giulio Pedrini

International Journal of Manpower, 2022, vol. 43, issue 6, 1449-1468

Abstract: Purpose - This paper investigates the relationship between labour hoarding practices and training investments during severe economic downturns focusing on the case of Italy during the Great Recession. Design/methodology/approach - Data come from the 2010 Italian wave of Continuing Vocational Training Survey (CVTS). Econometric estimates plug a proxy of labour hoarding into the probability function that firms provide either off-the-job or on-the-job training. A bivariate selectivity probit model is also used for robustness sake. Findings - Results show that labour hoarding should not be considered as an enhancer of training investments when considered as a standing-alone practice in presence of severe and deep economic downturn. However, labour hoarding does not penalize off-the-job training investments if it occurs in an innovative firm or in a firm that perceive specific skill requirements in the workforce during the recessionary period. Originality/value - The paper contributes to the debate on the role of labour hoarding during severe recessions by showing that it cannot be functional to re-oriented firms’ investments aimed at upskilling their workforce. It is only compatible with new training courses that accompany the workforce across a technological transition. Policy implications deals with the suitability of job retention schemes or state-financed furlough during recessions, as occurred during the coronavirus disease 2019 (COVID-19) pandemic.

Keywords: Skills; Training; Innovation; Recession; Labour hoarding (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:ijm-08-2021-0507

DOI: 10.1108/IJM-08-2021-0507

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