Intangible training capital and productivity in Europe

Abstract

This paper employs industry data, derived from linking the EU LFS to productivity accounts from EU KLEMS, to examine workforce training and productivity in European Union original members states. Training activities are modelled as intangible investments by firms and cumulated to stocks so their impact can be evaluated within a production function framework, including links to the use of information and communications technology (ICT). The results suggest significantly positive effects of training on productivity, both direct and interacted with ICT, with different impacts in services than in production industries. These results are robust to the use of instrumental variables methods, both lagged instruments and a set of variables that capture features of the operation of labour markets