The Impact of Training on Productivity

The Impact of Training on Productivity:

This paper investigates the e®ects of training on labor productiv-

ity using a unique nationally representative panel of Italian ¯rms for

the period 2002 to 2005. We ¯nd that training has a positive and

signi¯cant e®ect on productivity. Using a variety of panel estimation

techniques, we show that failing to account for unobserved heterogene-

ity leads to overestimate the impact of training on productivity, while

failing to account for endogeneity leads to substantially underestimate

it. Training also has a positive and signi¯cant impact on wages, but

this e®ect is about half the size of the e®ect on productivity. Within

occupational groups, the e®ect of training on productivity is large

and signi¯cant for blue-collars, but small and not signi¯cant for white

collars.

JEL Classi¯cation: C23, D24, J31.

Keywords: On-the-Job-Training; Productivity; Wages; Panel Data.

¤We thank Unioncamere for granting access to the Excelsior dataset. We also thank

Pietro Aimetti, Cecilia Corrado and Andrea Gianni for advice on the project and assistance

with the Excelsior data set. The views expressed are those of the authors and do not

necessarily re°ect the position of Unioncamere. The usual disclaimer applies.

yEconomics Department, University of Milan Bicocca. Piazza dell'Ateneo Nuovo 1,

20126 Milan, Italy. E-mail: emilio.colombo@unimib.it

zCorresponding author. Economics Department, University of Milan Bicocca. Piazza

dell'Ateneo Nuovo 1, 20126 Milan, Italy. E-mail: luca.stanca@unimib.it

1

1 Introduction

Human capital is widely acknowledged as a key factor for economic perfor-

mance at both the micro and macro level. Despite the fact that a large

fraction of human capital accumulation takes place after the entry into the

labor market, most of the existing literature that investigates the returns

to investment in human capital has focused