Abstract
In this paper we show that vocational training is an important determinant of productivity growth. We construct a multy-country, multi-sectoral dataset, and quantify empirically to what extent vocational training has contributed to increase the growth rate of labor productivity in Europe between 1999 and 2005. We find that one extra hour of training per employee accelerates the rate of productivity growth by around 0.55 % points.
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Notes
For example, in the context of the wide literature relating training and wages, Albert et al. (2010) examine six countries and claim that wage returns of training may have been traditionally overstated. In the increasingly popular search and matching framework, training decisions in Canada are examined in Caponi et al. (2010) and found to depend on a variety of aggregate and sectoral determinants. Using the same framework, Centeno and Corrêa (2010) argue that the type of technology, whether of the creative destruction or renovative type, is crucial to identify the best investment in human capital. On other grounds, Sousounis and Bladen-Howell (2010) show for the UK that persistence (that is, previous participation in training programmes) is crucial to explain worker’s participation in on-the-job training, whereas Grund and Martin (2010) find job status and firm size as the most relevant characteristics for training participation in Germany.
CVT courses are training measures or activities which the enterprise finances wholly or partly to their employees having a working contract. According to the European CVT survey, the primary objective of these courses is the acquisition of new competencies or the development and improvement of existing competencies. Routine work-adjustment training (i.e. basic familiarization with the job, organization or working environment) and routine information passing are excluded. There must be a training mediator (either a person, i.e. a trainer coach or supervisor, or a piece of equipment used for training, i.e. a computer or other training medium). Apprentices and employees without a working contract are excluded from this survey. Finally, unemployed persons receiving job-related training courses financed by the labor market authorities are also excluded from CVT.
Due to lack of data, some of these economies cannot be considered in the empirical analysis. These are, in particular some former East European countries such as the Czech Republic, Estonia, Hungary, Poland, and Slovenia which have rates of cumulative productivity growth above 20 %. These outstanding performance is very much related to the economic catching up process in which they are still involved. Norway is also excluded, as well as Greece.
On close grounds, Kemeny (2010) shows that technological upgrading crucially depends on foregin direct investment. Particularly important for us is the finding that the relevance of this link very much depends on the level of social capability (Kemeny 2010) which can be related to education and training.
More details on this interpretation are provided below when we discuss the empirical results.
Although in the context of our model the presence of the change in R&D expenditures is related to the technological gap, the simultaneous presence of the level and change of this variable gives rise to an empirical test on the prominence of first-generation Schumpeterian growth models—where it is the level of R&D which directly enhances growth—versus the semi-endogenous ones—where it is the change in R&D what matters. Taken at face value, our results provide empirical support for the first class of growth models, along the lines of Madsen (2008). We should also point out that the change in R&D expenditures remains non-significant even when the level is excluded from the regression.
The estimation of a two-way fixed-effects model would imply regressing
$$ q_{ij}=\left( \alpha +\mu_{j}+\lambda_{i}\right)+{\mathbf{\beta X}}_{ij}+v_{it}. $$However, one of the variables—education ed—is country invariant and impedes the estimation of such model on account of multiple collinearity.
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Acknowledgments
Constructive advice from two anonymous referees has contributed to improve this paper. We thank Leonel Muinelo for helpful comments and discussions on earlier versions of it. We also want to thank participants of the 2011 Jornadas de Economía Laboral in Santiago de Compostela (Spain), the 2011 ASSET Meeting in Evora (Portugal) and seminar participants at Universitat Jaume I in Castelló (Spain) for valuable insights. Hector Sala and José I. Silva acknowledge financial support from the Instituto de Estudios Fiscales under the project "Formación, productividad y crecimiento económico en la Unión Europea". We are also grateful to the Spanish Ministry of Economy and Competitiveness for financial support through grant ECO2012-31081.
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Sala, H., Silva, J.I. Labor productivity and vocational training: evidence from Europe. J Prod Anal 40, 31–41 (2013). https://doi.org/10.1007/s11123-012-0304-0
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DOI: https://doi.org/10.1007/s11123-012-0304-0