The Impact of Training on Productivity and Wages: Firm Level Evidence This paper uses firm level panel data of firm provided training to estimate its impact on productivity and wages. To this end the strategy proposed by Ackerberg, Caves and Frazer (2006) for estimating production functions to control for the endogeneity of input factors and training is applied. The productivity premium for a trained worker is estimated at 23%, while the wage premium of training is estimated at 12%. Our results give support to recent theories that explain work related training by imperfect competition in the labor market.JEL Classification: J24, J31 and L22

Abstract:In recent years, Europe has witnessed an accelerated process of economic integration. Trade barriers were removed, the euro was introduced and ten new member states have joined the European Union. This paper analyzes how this process of increased economic integration has affected labor and product markets. To this end, we use a panel of Belgian manufacturing firms to estimate price-cost margins and union bargaining power and show how various measures of globalization affect them.Our findings can be summarized as follows: On average, firms set prices about 30% above marginal costs, but there is substantial variation across sectors, with the lowest mark-up around 19% and the highest around 52%. In addition, we find evidence that unions bargain over both wages and employment. We estimate an index of bargaining power, which reflects the fraction of profits that is passed on to workers into higher wages. Depending on the sector, this fraction varies between 6% and 18% and it increases with the markups of firms. Finally, we find that globalization puts pressure on both markups and union bargaining power, especially when there is increased competition from the low wage countries. This suggests that increased globalization is associated with a moderation of wage claims in unionized countries, which should be associated with positive effects on employment.

This article intends to further unravel the relationship between employee turnover and organizational performance. We test a complex non-linear relationship between turnover and performance, integrating different theoretical views (i.e. theories on human and social capital, operational disruptions and organizational learning) and using polynomial regressions. Based on organizational routines theory, we also consider the role of turnover volatility, i.e. the turbulence in turnover across time. To this end, we make use of longitudinal data of Belgian firms over a period of 10 years (1999-2008). Our results confirm the complex non-linear relationship such that organizations' labor productivity increases at low levels of turnover, reaches a peak and decreases afterwards in a negatively attenuated fashion. Moreover, turnover volatility is negatively associated with labor productivity, suggesting that organizations find it especially difficult to deal with strong and frequent changes in turnover across time. Finally, volatility also moderates the relationship between employee turnover and labor productivity. The higher turnover volatility, the less outspoken the positive results of small amounts of turnover. At high levels of turnover, firms with medium volatility suffer the most negative effects. Both research and practical implications of these findings are considered.

The Impact of Training on Productivity and Wages: Firm Level Evidence This paper uses firm level panel data of firm provided training to estimate its impact on productivity and wages. To this end the strategy proposed by Ackerberg, Caves and Frazer (2006) for estimating production functions to control for the endogeneity of input factors and training is applied. The productivity premium for a trained worker is estimated at 23%, while the wage premium of training is estimated at 12%. Our results give support to recent theories that explain work related training by imperfect competition in the labor market.JEL Classification: J24, J31 and L22

Abstract:In recent years, Europe has witnessed an accelerated process of economic integration. Trade barriers were removed, the euro was introduced and ten new member states have joined the European Union. This paper analyzes how this process of increased economic integration has affected labor and product markets. To this end, we use a panel of Belgian manufacturing firms to estimate price-cost margins and union bargaining power and show how various measures of globalization affect them.Our findings can be summarized as follows: On average, firms set prices about 30% above marginal costs, but there is substantial variation across sectors, with the lowest mark-up around 19% and the highest around 52%. In addition, we find evidence that unions bargain over both wages and employment. We estimate an index of bargaining power, which reflects the fraction of profits that is passed on to workers into higher wages. Depending on the sector, this fraction varies between 6% and 18% and it increases with the markups of firms. Finally, we find that globalization puts pressure on both markups and union bargaining power, especially when there is increased competition from the low wage countries. This suggests that increased globalization is associated with a moderation of wage claims in unionized countries, which should be associated with positive effects on employment.

This paper uses a unique dataset to study the short term effects of downsizing on operational and financial performance of large German firms. In general, productivity and profitability after downsizing are -at the best -comparable to their pre-downsizing levels. During the downsizing event, the performance even drops. Moreover we make a distinction between firms downsizing because of a business downturn and firms downsizing to increase efficiency. Especially downsizing for the latter firms appears to be unsuccessful. JEL codes: G34, L19, L25, D24

As employees are among firms’ most important resources and labor markets are facing serious labor shortages, firm-level collective turnover is one of the most important challenges facing organizations. Context-emergent turnover theory provides a theoretical framework for the performance implications of collective turnover and argues that context, and in particular, firm size, plays a crucial role in the collective turnover–performance relationship. Yet, the moderating role of firm size remains undertheorized, empirically understudied, and thus, unclear. Based on the resource-based view of the firm, we develop a theoretical framework for two competing perspectives (a negative and a positive one) on the role of firm size and put forward the firm’s knowledge intensity as a crucial additional moderator. The main premise is that whereas firm size determines what resources firms have to successfully cope with turnover, knowledge intensity determines the resources firms need to do so. We propose a three-way interaction, suggesting that firm size reinforces the harmful effect of turnover in highly knowledge-intensive firms and buffers it in firms with low levels of knowledge intensity. Using a unique multi-industry and longitudinal administrative data set of 6,913 Belgian firms (2012–2016), we find support for these assumptions. This study highlights the importance of the context in which firms have to deal with turnover, and it spurs researchers to go beyond studying turnover in narrow study contexts, to take into account the interplay among different but intertwined organizational contingencies, and to acknowledge both the quantitative (how many employees leave) and qualitative components (who leaves) of turnover.

This paper analyzes the effects of an investment subsidy program for small and medium-sized enterprises in Flanders from 2004 to 2009. The subsidies were awarded according to a ranking system that favored young, growing and productive firms with a strong cash flow, granting subsidies to the highest scoring firms until the depletion of funds. The nature of this allocation system creates a sharp cut off in granting the subsidy according to the score, allowing us to estimate the causal impact of the subsidies using a regression discontinuity design. We find a positive effect on firm-level investment, employment, output and productivity for the firms that were granted the subsidy, but only for the small firms. However, the effect is small relative to the cost of the subsidy.