The impact of training on productivity and wages in Tunisia

PurposeThe purpose of this paper is to investigate the impact of training on labor productivity and wages in order to examine how the benefits from training are shared between employers and employees.Design/methodology/approachThis study analyzes an industry panel covering all sectors of the Tunisian economy for the period 2000–2014. The panel structure of the data allows controlling for the endogeneity of training by using different panel data techniques.FindingsResults show that both employers and workers benefit from training since it has a positive and significant effect on productivity and wages. However, the effect of training on productivity is substantially higher than on wages, suggesting that employers obtain the largest part of the returns to training. This result is consistent with theories that explain firm-sponsored training by a compressed wage structure in imperfect labor markets.Originality/valueThis study, particularly showcasing the labor market in Tunisia, is one of the first to provide estimates for a developing country to assess the effects of training for both employer and employee. It is also among the few empirical works that analyzed the impact of training on labor productivity and wages simultaneously.

The Economic and Social Benefits of Skills

This chapter discusses the returns to employers and to society at large. It argues that, in certain circumstances, the private returns to individuals will be greater than the economic returns to society. This is because individuals may simply be buying credentials which advantage them in a labour market characterized by positional competition, without necessarily been more productively employed than they would have been had they not received the training in question. The chapter goes on to argue that the extant literature on returns to employers is indecisive and, linked to this, that official rationales for government training subsidies to employers are often confused. Finally it considers the non-economic returns to training.