Who gains when workers train? Training and corporate productivity in a panel of British industries

John van Reenen

No W00/04, IFS Working Papers from Institute for Fiscal Studies

Abstract: There is a vast empirical literature of the effects of training on wages that are taken as an indirect measure of productivity. This paper is part of a smaller literature on the effects of training on direct measures of industrial productivity. We analyse a panel of British industries between 1983 and 1996. Training information (and other individual productivity indicators such as education and experience) is derived from a question that has been asked consistently over time in the Labour Force Survey. This is combined with complementary industry-level data sources on value added, wages, labour and capital. We use a variety of panel data techniques (including system GMM) to argue that training significantly boosts productivity. The existing literature has underestimated the full effects of training for two reasons. First, it has tended to treat training as exogenous whereas in reality firms may choose to re-allocate workers to training when demand (and therefore productivity) is low. Secondly, our estimates of the effects of training on wages are about half the size of the effects on industrial productivity. It is misleading to ignore the pay-off firms take in higher profits from training. The effects are economically large. For example, raising the proportion of workers trained in an industry by 5 percentage points (say from the average of 10% to 15%) is associated with a 4 per cent increase in value added per worker and a 1.6 per cent increase in wages.

Keywords: Productivity; training; wages; panel data (search for similar items in EconPapers)
JEL-codes: C23 D24 J31 (search for similar items in EconPapers)
Pages: 69 pp
Date: 2000-04-02
New Economics Papers: this item is included in nep-edu, nep-eff, nep-lab, nep-ltv and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (83)

Downloads: (external link)
http://www.ifs.org.uk/wps/wp0004.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.ifs.org.uk/wps/wp0004.pdf [301 Moved Permanently]--> https://www.ifs.org.uk/wps/wp0004.pdf [302 Found]--> https://ifs.org.uk/wps/wp0004.pdf)

Related works:
Working Paper: Who Gains when Workers Train? Training and Corporate Productivity in a Panel of British Industries (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ifs:ifsewp:00/04

Ordering information: This working paper can be ordered from
The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE

Access Statistics for this paper

More papers in IFS Working Papers from Institute for Fiscal Studies The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE. Contact information at EDIRC.
Bibliographic data for series maintained by Emma Hyman ().