The Impact of Training on Productivity and Wages: Evidence from British Panel Data

Abstract

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.