Does Human Capital Influence Labor Productivity? Evidence from Nigerian Manufacturing and Service Firms

Adamu Jibir (), Musa Abdu () and Abdullahi Buba
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Adamu Jibir: Gombe State University
Musa Abdu: Gombe State University

Journal of the Knowledge Economy, 2023, vol. 14, issue 2, No 10, 805-830

Abstract: Abstract Human capital is nowadays considered as a key element that can be utilized to achieve organizational objectives. Firms always try to effectively manage their workforce through human capital development in order to achieve not only business objective but also business survival and sustainability. Using the World Bank Panel Business Enterprise Survey data for Nigeria, this study seeks to tests the contributions of stocks of and investments in human capital to firms’ labor productivity. The study used techniques of fixed effect and one-step generalized method of moments (GMM) to estimate the specified models. The overall findings are that stocks of and investments in human capital contribute significantly to the firms’ productivity. In particular, average years of educational attainment of skilled workers (professional competencies), GM level of education (complex functions), and workers with high school education (basic skills) are the stocks of human capital that bring about gains in labor productivity, while absenteeism due to HIV/malaria causes productivity losses to the firms. R&D and bonus system are the significant investments in human capital that also lead to labor productivity gains. Predictably, service firms appear to benefit more from productivity contributions of both stocks of and investments in human capital as R&D is even only significant in determining service firms’ productivity. Other findings of the study include firms’ age, scale of operation, legal status, and ownership structure. These results have important policy implications for targeting the significant variables to increase firms’ productivity and competitiveness.

Keywords: Competitiveness; Firms; Human capital; Labor productivity (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13132-021-00878-8

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