Financial support from the Economic and Social Research Council and the Leverhulme Trust is gratefully acknowledged. We would like to thank Fernando Galindo-Ruedo, Amanda Gosling, Richard Layard, Lisa Lynch, Stephen Machin, Steve McIntosh, Alan Manning, Steve Pischke, two anonymous referees and participants in many seminars for helpful comments. We are grateful to the Office for National Statistics (ONS) for supplying the Census of Production data and to the Organization for Economic Co-operation and Development (OECD) for supplying the Inter-Sectoral Data Base (ISDB) data. We would like to thank Martin Conyon for supplying the firm-level training data and Jonathan Haskel for providing us with some of the industry price indices used in this paper. Material from the Labour Force Survey is Crown Copyright, has been made available by the ONS through the ESRC Data Archive and has been used by permission. Neither the ONS nor the Data Archive bears any responsibility for the analysis or interpretation of the data reported here. An earlier version of this paper (with a longer data description) has appeared as ‘Who gains when workers train’, Working Paper No. 00/04, Institute for Fiscal Studies.
The Impact of Training on Productivity and Wages: Evidence from British Panel Data*
Version of Record online: 1 AUG 2006
Oxford Bulletin of Economics and Statistics
Volume 68, Issue 4, pages 397–421, August 2006
How to Cite
Dearden, L., Reed, H. and Van Reenen, J. (2006), The Impact of Training on Productivity and Wages: Evidence from British Panel Data. Oxford Bulletin of Economics and Statistics, 68: 397–421. doi: 10.1111/j.1468-0084.2006.00170.x
- Issue online: 1 AUG 2006
- Version of Record online: 1 AUG 2006
- Final Manuscript Received: September 2005
It is standard in the literature on training to use wages as a sufficient statistic for productivity. This paper examines the effects of work-related training on direct measures of productivity. Using a new panel of British industries 1983–96 and a variety of estimation techniques we find that work-related training is associated with significantly higher productivity. A 1% point increase in training is associated with an increase in value added per hour of about 0.6% and an increase in hourly wages of about 0.3%. We also show evidence using individual-level data sets that is suggestive of training externalities.