Innovation, Productivity, and Training

37 Pages Posted: 4 Oct 2014

See all articles by Benoit Dostie

Benoit Dostie

HEC Montreal - Institute of Applied Economics; IZA Institute of Labor Economics


The firm's stock of human capital is an important determinant of its ability to innovate. As such, any increase in this stock through firm-sponsored training might lead to more innovation. We test this hypothesis using detailed data on firms' human capital investments and innovation performance, the Canadian longitudinal linked employer-employee data from 1999-2006. Our results, with workplace fixed-effects and allowing for time-varying productivity shocks, demonstrate that more training leads to more product and process innovation, with on-the-job training playing a role that is as important as classroom training. We then demonstrate that on-the-job training has a positive impact on firm-level productivity through improved process innovation.

Keywords: innovation, firm-sponsored training, productivity, linked employer-employee data

JEL Classification: J24, L22, M53, O32

Suggested Citation

Dostie, Benoit, Innovation, Productivity, and Training. IZA Discussion Paper No. 8506, Available at SSRN:

Benoit Dostie (Contact Author)

HEC Montreal - Institute of Applied Economics ( email )

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514-340-6469 (Fax)


IZA Institute of Labor Economics

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