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

25 Pages Posted: 27 Jul 2006

See all articles by Lorraine Dearden

Lorraine Dearden

Institute for Fiscal Studies (IFS)

Howard Reed

Institute for Fiscal Studies (IFS); University College London - Centre for Social and Economic Research on the Global Environment (CSERGE)

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

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.

Suggested Citation

Dearden, Lorraine and Reed, Howard and Van Reenen, John Michael and Van Reenen, John Michael, The Impact of Training on Productivity and Wages: Evidence from British Panel Data. Oxford Bulletin of Economics and Statistics, Vol. 68, No. 4, pp. 397-421, August 2006, Available at SSRN: https://ssrn.com/abstract=920949 or http://dx.doi.org/10.1111/j.1468-0084.2006.00170.x

Lorraine Dearden (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Howard Reed

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

University College London - Centre for Social and Economic Research on the Global Environment (CSERGE)

Gower Street
London WC1E 6BT, Norwich
United Kingdom

John Michael Van Reenen

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

London School of Economics - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6976 (Phone)
+44 20 7955 6848 (Fax)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom
+44 20 7240 6740 (Phone)
+44 20 7240 6136 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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