Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 455: Cost and Productivity Effects of Firm Financed Training

Eugenia Kazamaki Ottersten, Thomas Lindh and Erik Mellander
Additional contact information
Eugenia Kazamaki Ottersten: Research Institute of Industrial Economics (IFN)
Thomas Lindh: Uppsala University
Erik Mellander: Research Institute of Industrial Economics (IFN)

Abstract: A quality-adjusted specification of labor is suggested which allows firm training to affect labor efficiency. To assess the cost and productivity effects, this specification is integrated into a flexible neoclassical cost function. The empirical analysis uses panel data for eight plants in the Swedish Machine Tool Industry. The econometric results imply a high probability that training expenditures result in net decreases in total costs. Judging from the corresponding point estimates, these cost savings can be very large. The estimates of productivity effects are also positive, albeit rather small.


JEL-codes: C51; D21; J24; J31

47 pages, April 9, 1996

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