Technical Change and the Returns and Investments in Firm-level Training: Evidence from Thailand

Abstract

This paper examines determinants of investments in and returns to training with focus on technical changes using employee panel data in Thai manufacturing industries. Empirical findings demonstrate significant returns to both on-the-job and off-the-job training in first-difference fixed effect estimation of wage equations, controlling for technical changes which differentially influence training investments and the returns. First, returns to informal on-the-job training are robust, contrary to findings from developed countries. Second, technical change induces both on-the-job and off-the-job training, and controlling for technical change makes returns to on-the-job training even larger. Implications for training and education policies are discussed.

Gender matters: Private sector training in Vietnamese SMEs

“…If selection into training is based partly on unobserved characteristics such as worker ability or a firm's training practices, this could lead to an over-estimation of the impact of training on individual productivity. Yamauchi et al (2009) address this point by using an employee panel dataset based on retrospective training questions (over three years) for workers employed in large Thai manufacturing enterprises. The findings suggest that on-the-job training is important, particularly among production workers and newly hired workers; however, the impact disappears when an interaction term with past experience is included.…”

“…2 For evidence on training participation, see, e.g., Backes-Gellner et al (2014), Barron et al (1993), Blundell et al (1996), Lynch (1992), Ng (2005), Pischke (2001), Yamauchi et al (2009). For return to labour, see, e.g., Bertrand (2011), Blau and Kahn (2006), Gneezy et al (2003), Goldin (2014), Manning and Swaffield (2008), Statt (1998).…”

The Returns from Training in Colombia: Evidence from a Longitudinal Survey

“…To be able to meet the challenges of a competitive market, a faster technological change needs to move together with a highly qualified labour force (Arulampalam and Booth, 1998); Therefore, individuals' skills formation in the labour market is important. This allows workers to satisfy employers' needs for new skills and to maximize the efficiency of new technologies (Yamauchi et al, 2009).…”

“…Following the above/ whether or not gains in productivity translate into higher wages depends on labour market characteristics and on whether or not there is a competitive market. Thus, to evaluate the returns from training, some authors have used alternative measures of productivity from employee-employer data (see, Dostie, 2013;Percival et al, 2013;Yamauchi et al, 2009). Percival et al, (2013) used data for Canada between 1999 to explore the impact of investing on training on industries' productivity.…”

“…There has been a lot of research regarding the relevance of training in general and of on the job training in particular. Previous evidence suggests that training does not only help workers to adapt to the specific needs of the economy and firms but keeps the economy competitive and promotes growth and prosperity (Jenkins et al, 2003;Yamauchi, Poapongsakorn, and Srianant, 2009). Training has also shown to have a positive effect on income distribution by benefiting low skilled workers.…”