Human capital and productivity - AWPA

wage benefits such as training or conversely may subsidise such benefits through accepting lowerwages.Notwithstanding these advantages, firm level studies present their own challenges. Chief amongthese is the difficulty of obtaining reliable data. This may partly explain why there appears to be lessliterature on the relationship between learning and productivity at the firm level in many countriesincluding Australia. 21 Also, it appears that much of the literature at the firm level focuses on the linkbetween non-certified learning (as opposed to formal learning) and productivity. The results of themain firm level studies identified by this review are summarised in table 3 below.Table 3—Learning and productivity at the firm levelStudy Country Key resultsPrais, Jarvis andWagner (1989)Holzer, Block,Cheatham, andKnott (1993)UK,GermanyUSBetter vocationally training in German hotels was associated witharound a one third reduction in labour requirements compared tohotels in the UK.Receipt by manufacturers of state training grants is associated with alarge and significant, though one-time, increase in training hours,and with a more lasting reduction in output scrap rates (as anindicator of worker performance and productivity).Bishop (1994) US The productivity gains from training are more likely to flow to firmsthen individuals when the training develops skills that are specific toa firm or specific to an industry or occupation (i.e. to a small numberof firms in a locality).Bartel (1994) US Formal training in firms with relatively low productivity (compared tocompetitors) was associated with a 6 per cent increase inproductivity per year and enabled the firm to catch-up to competitors.Lynch and Black(1995)USThere are significant and positive effects on productivity associatedwith investments in human capital. Those establishments that hirebetter educated workers have appreciably higher productivity.The impact of employer provided training differs according to thenature, timing and location of the employer investments. The numberof workers in the firm in receipt of training did not have an effect onproductivity for either the manufacturing or non-manufacturingsample of firms. However, the percentage of formal training thatoccurred off-the-job had a significant effect on labour productivity inthe manufacturing sector.Bartel (1995) US Formal training within a manufacturer was associated with a positiveand significant effect on rate of return, job performance andproductivity. For example the return to the company was at least 13per cent.Lynch and Black(1996)USA 10 per cent increase in average education was associated with anincrease of 8.5 per cent and 12.7 per cent in manufacturing and nonmanufacturing,respectively.Black and Lynch(1997)US No significant association found between training and productivity. 2221 It also affects the reliability of studies with many relying on relatively small samples. For example, Blandy etal., (2000) involved a sample of only 95 firms (including three in depth case studies). However, there are somestudies that use larger samples. For example, Black and Lynch (2001) used a sample of more than 3,000 privateestablishments.22 Note, the authors suggested that the survey information used may have been too weak to capture the effectsof training in the estimation framework.Australian Workforce and Productivity Agency | Human capital and productivity literature review 17