The Impact of Training on Productivity: Evidence from a Large Panel of Firms ⁄

Abstract

This paper investigates the effects of training on labor productiv-ity using a unique nationally representative panel of Italian firms for the period 2002 to 2005. We find that training has a positive and significant effect 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 significant impact on wages, but this effect is about half the size of the effect on productivity. Within occupational groups, the effect of training on productivity is large and significant for blue-collars, but small and not significant for white collars. JEL Classification: C23, D24, J31.